John Sununu, who serves on the Congressional Oversight Panel monitoring the government’s bailout program, has joined the board of a subsidiary to Bank of New York Mellon — a firm that, in addition to receiving bailout funds, has been hired by the Treasury Department to administer the program.
Given that the Congressional Oversight Panel (COP) is charged broadly with assessing how the TARP program is working, in order to help Congress determine whether to continue injecting capital into the financial sector, the arrangement would appear to create a significant conflict of interest for the former New Hampshire GOP senator.
On Wednesday, the investment firm BNY ConvergEx Group announced that Sununu had joined its board of governors. “His experience as a thoughtful leader and champion of innovation makes him an ideal match for ConvergEx’s entrepreneurial spirit,” said company chairman Joseph Velli of Sununu.
According to its press release, the company is an affiliate of Bank of New York Mellon (BONY). Founded by Alexander Hamilton in 1784, BONY received $3 billion in TARP funds back in October — less than some Wall Street firms, but not chump change.
Just as significantly, it was also picked to be the master custodian for the bailout funds. According to reports, that means it’s charged with handling accounting and record-keeping for the program, and even with tracking limits on executive pay at banks that got TARP money.
Sununu was appointed to the COP by GOP Senate leader Mitch McConnell in December — a little over a month after he was defeated by Democrat Jeanne Shaheen in his bid for reelection to the Senate.
Sununu’s conflict, then, appears clear. As a member of the COP, he’s in part responsible for evaluating whether taxpayers got a good deal through TARP, and for assessing whether Treasury and the banks are doing enough to track the bailout money, as well as whether banks are using the money to make loans, as they were supposed to. On the broadest level, COP’s job is to help Congress figure out whether the TARP program is working as it should, and how to adjust it going forward. It’s not hard to see how that responsibility could conflict with his activities as a member of the board of a company that both administers the TARP program, has received funds from it, and could potentially be in line for more.
In his work on the panel so far, Sununu has hardly been an advocate for taking a hard line on the banks. Earlier this month, the COP, which is chaired by Harvard Law professor Elizabeth Warren, released a report detailing the kinds of far-reaching reforms to bolster the financial regulatory system that the crisis has pointed up the need for. But Sununu and the panel’s other Republican, Rep. Jeb Hensarling didn’t sign on. Instead, they attached their own alternative report, that recommended an approach to financial regulation that was more friendly to Wall Street, and emphasized the need to rein in Fannie Mae and Freddie Mac, the government-backed mortgage firms.
No one answered a listed number for Sen. John E. Sununu in Portsmouth, New Hampshire.
We’ve also contacted COP to ask whether Sununu discussed his ties to Bank of New York Mellon with panel staff. And we’re hearing there’s more to this story … so we’ll keep you posted.