By By Peter Schroeder and Bernie Becker - 03/13/14 06:00 AM EDT
Wall Street is counting down the days until the retirement of Sen. Carl LevinCarl LevinSenate continues to disrespect Constitution, Obama and Supreme Court by not voting on Garland As other regulators move past implementing Dodd-Frank, the SEC falls further behind Will partisan politics infect the Supreme Court? MORE.
From his perch atop the Senate Permanent Subcommittee on Investigations, Levin (D-Mich.) has antagonized big finance by doggedly pursuing banks for bad behavior such as laundering money for drug cartels or helping the wealthy hide money in offshore accounts.
But to the business interests on the other side of the dais, Levin’s conduct felt at times like an inquisition aimed at casting blame and grabbing headlines.
“He thought he was being a counterbalance to the powerful interests,” one lobbyist who dealt with the subcommittee said. “But being on the receiving end, no one’s going to miss having subpoenas from [the subcommittee].”
Levin’s supporters say his work as chairman — aided by a staff that only occasionally numbered in the double digits — resulted in tougher rules for Wall Street and more aggressive actions against tax cheats.
Dennis Kelleher, who heads the financial reform group Better Markets, said Levin’s work sets “the gold standard for how someone should investigate Wall Street.”
Levin, who will retire at the end of 2014, has no qualms about taking financial giants to task if their bad behavior merits it.
“People who have done extremely well financially — when you go after some of the ways in which that’s been accomplished, they obviously are not thrilled about it,” Levin said. “But that’s something which is part of the job.”
The Michigan senator said he was proud of the subcommittee’s record during his 15 years as top Democrat.
While there aren’t always direct connections between the panel’s work and legislation or regulatory actions, Levin said there are “pretty clear connections” with things like credit card reform, the Dodd-Frank financial reform law, and the global crackdown on offshore tax evasion.
For example, Levin’s panel dug into the botched “London Whale” trades that cost JPMorgan billions of dollars. At the time, the financial industry was pushing regulators for leeway on the Volcker Rule, a central and contentious provision of Dodd-Frank designed to stop banks from making risky investments for their own profit.
The final language in the Volcker Rule, released eight months after Levin’s hearing, took a tougher stance than many had expected.
“All of a sudden, regulators got busy,” Sen. John McCain (R-Ariz.), the ranking member of the subcommittee, said about the JPMorgan investigation.
Levin’s panel has also produced more direct results. In 2012, a top executive for compliance at HSBC publicly resigned before Levin’s panel, after it published a report documenting how the British bank failed to curb money laundering through its branches.
In 2008, the Swiss bank UBS announced before Levin that it would stop providing offshore banking services to U.S. clients. It later announced that it would unmask some American clients as well.
Levin believes that whoever takes over his gavel — whether it be a Republican or Democrat — will continue to keep the heat on Wall Street come 2015.
To that end, he has enjoyed bipartisan backing for many of his probes, as his Republican counterparts have regularly endorsed the bank critiques.
The bipartisan spirit was likely buoyed by the fact that the panel often trained just as much fire at federal regulators who failed to sniff out or prevent the banks’ bad behavior in the first place.
But even those senators who might take the reins of the subcommittee acknowledge that Levin will be a tough act to follow.
The panel enjoys a broad jurisdiction; it can investigate problems in all aspects of the government, with past inquiries covering everything from the Mafia to the insurance industry. It also gives its chairman such wide discretion that aides outside the top spots on the panel are often in the dark about who or what Levin is investigating.
Under Levin’s watch, the panel has devoted most of its energy to investigating bad behavior by banks, and it’s tough to imagine that any successor would have as intense a focus on corporate titans. Levin has also become infamous for his attention to detail, often single-handedly spending hours grilling bankers at hearings.
“It’s going to be hard,” McCain said. “He has a meticulous attention to detail. That’s one of the things that makes him most effective.”
Officials both on and off Capitol Hill say Sen. Claire McCaskill (D-Mo.), a former prosecutor and state auditor, could be a natural fit to take over the top Democratic spot on the panel.
McCaskill said it “would be a thrill” to get the gavel at the investigations panel, and was full of praise for Levin’s work.
“I love oversight. I love investigations,” she said. “I don’t know if that will work out. But I think I’d be a fool not to be interested in it.”
But no matter the successor, K Street and Wall Street are ready for someone to replace a chairman that the lobbyist called “an equal opportunity hater” with an investigatory style that had a “Spanish inquisition flavor.”
Others who have been the subject of a Levin probe say they have felt vilified by Levin even after cooperating with his staff. A representative for one institution that fell under the senator’s scrutiny said it seemed like the main goal was a public shaming and said Levin failed to publicly acknowledge their cooperation behind the scenes.
But lobbyists also express some begrudging respect for Levin’s work, saying his acute focus on tax evasion has helped prepare banks for the global crackdown on tax evasion.
“Our clients would throw me off the building if they heard me say this: But he has served a very useful function in this area for a number of years,” the lobbyist said. “He wasn’t always fair. But he did his homework, and he made a plausible case that had to be answered.”
And with eight months to go in his Senate career, Levin is showing no signs of going quietly. His panel is hard at work on several more investigations that he hopes to produce before the end of the year.
“The subcommittee has a lot of important work to do this year on issues facing this country,” Levin said.