The California Republican won't rest until Treasury and the Fed tell all about their roles in bailing out Wall Street firms
Since Newt Gingrich's 1994 Republican Revolution, House Republicans have been the self-appointed brawlers of the federal government—fighting for their beliefs, sure, but also sometimes for sport. After a 2008 pummeling, the GOP lost 21 House seats and also its enthusiasm for an old-fashioned scrap.
2010, though, is a more promising year for fans of political fisticuffs, thanks largely to Darrell E. Issa, the five-term California Republican congressman and bantam-weight challenger of President Barack Obama's economic policies. Issa (pronounced eye-suh) has exploit public anger over Wall Street and focused attention on the Administration's judgment and conduct during the bailout frenzy.
Raised in modest circumstances in the Cleveland area during the 1950s (Issa's father, the son of a Lebanese immigrant, was a General Motors truck salesman who moonlighted as an X-ray technician), Issa says he was "a kid who grew up looking out at greater wealth and greater power. I have a healthy questioning of government and power." Those on the receiving end of a blast from Issa—the wealthiest member of Congress, worth about $250 million from the sale of Directed Electronics (DEIX), a car-alarm company he started—have tended to dismiss him as an opportunist and bomb-thrower. If so, he's an effective one. In his role as the senior Republican on the Oversight & Government Reform Committee, Issa has won party raves for his inquisition of Treasury Secretary Timothy F. Geithner over his role in the $182 billion bailout of insurer American International Group (AIG). "There is no one you'd less want to get into a fight with than Darrell Issa," says Sam Geduldig, a former House Republican leadership aide who is now a financial services lobbyist in Washington. "He is our Waxman."
That would be Representative Henry A. Waxman, the California Democrat and legendary pit-bull investigator who is an inspiration of sorts for Issa. When Waxman ran the oversight panel—the current chairman is Representative Edolphus Towns (D-N.Y.)—Issa says he took careful notes while Waxman hammered away at the Bush Administration over the Iraq War, Halliburton (HAL), and Hurricane Katrina.
Issa, 56, has at times out-maneuvered Towns, who was embarrassed last year when his own home loans from Countrywide Financial, the subprime lender, became public. Last year, Issa pressed the panel to vote to subpoena documents on the Countrywide VIP loans to lawmakers from the lender's new owner, Bank of America (BAC). Towns, who received a mortgage via the same Countrywide unit that ran the program but denies he received special treatment, postponed a hearing claiming scheduling conflicts.
So Issa's staff waited by a side door of the committee room that day with a video camera and taped the Democrats walking away. Though it was unclear whether they had real appointments or were trying to head off political humiliation, Issa's staffers used the tape to produce a video set to the tune of Hit the Road, Jack. The tape soon made the rounds online. Towns relented a few days later and issued the subpoena.
Such tactics suggest that Issa is hardly a starched-collar Republican—and he has the rap sheet to prove it. As a young man, he was charged twice with auto theft (both times the charges were dropped) and convicted of misdemeanor gun possession (he paid a small fine and did three months' probation). After two stints in the Army, Issa's brushes with the law inspired him to launch Directed Electronics, which makes the Viper car alarm. (If you own one, that's Issa's voice saying, "Please step away from the car.")
That wealth came in handy in 2003 when Issa gained national prominence as the key money man behind the campaign to recall Democratic Governor Gray Davis. Though he has long tried to be heard on issues ranging from immigration to Middle East affairs, it's Issa's calls for greater transparency of the massive $787 billion economic stimulus package and ongoing bank bailouts that have finally made him a national force.
His investigations rarely turn up smoking guns, but that's not the point. Instead he ties up his targets for months with hostile questions and subpoenas. Strategic leaking is also part of the package. The panel's investigative reports and subpoenaed documents often hit the news shortly before a hearing. "You in the press are our greatest resource," says Issa.
Issa says he will continue his probes into AIG and Countrywide. The Administration's stimulus spending and the $700 billion banking rescue will also be an ongoing focus of the panel, he says. Another target: the Federal Reserve and its chairman, Ben Bernanke, the "unindicted co-conspirator" at the panel's recent hearing on the AIG bailout, he says.
The Fed chairman, Geithner, who was president of the New York Federal Reserve Bank at the time, and former Treasury Secretary Henry M. Paulson Jr. were slow to tell lawmakers about the extent of AIG aid even as they were beseeching Congress to pass the $700 billion Troubled Asset Relief Program in 2008, Issa says. "They were disingenuous with us, even if they didn't outright lie." Spokespersons for all three declined to comment.
Under questioning from Issa and others, Geithner confirmed that he recommended paying AIG's trading partners, including Goldman Sachs (GS) and several foreign banks, full price to unwind their derivatives contracts. Still, Geithner said he was already picked to lead the Treasury and thus recused from the November 2008 decision not to publicly reveal the payouts. The recusal, never formalized in writing, speaks to Geithner's character, Issa says. "That's a Geithner story: He's there for the ribbon-cutting and not for the cracked road."
Issa says there will be more revelations to come regarding AIG and Countrywide, even as critics argue it's time to move on from the blame game. "Tarring and feathering someone is not going to fix this," says Bill Brown, a visiting professor at the Duke University School of Law and former Morgan Stanley (MS) managing director. Issa seems to be having far too much fun brawling to heed such advice.