Dingells and GM illustrate limits of congressional conflict-of-interest rules

January 11, 2010

They met in the first-class cabin on a bumpy flight between Detroit and Washington, a gruff lion of a lawmaker from Michigan and a young lobbyist for General Motors, granddaughter of one of the company's pioneer executives.

Rep. John D. Dingell Jr. (D), then 55 and one of the most powerful men in the country, usually did not talk to seatmates. He made an exception for Debbie Insley because she was a white-knuckle flier nervous about the turbulence. Despite their 27-year age difference, they hit it off, and in 1981 she became his second wife.

Their union brought together very divergent interests: the lawmaker's obligation to craft legislation that serves the public and his wife's financial dependency on an industry whose fortunes were directly affected by Congress. The Dingells have always been open about their relationship, and the evidence is that they have always complied with the rules. But the mere existence of such a conflict resonates at a time of close ethical scrutiny on Wall Street, in government and elsewhere.

The couple accumulated millions in GM holdings in the early 2000s through Debbie Dingell's job, by far the largest portion of the family's personal wealth, public records show. At the same time, John Dingell was Detroit's staunchest ally, fighting against emissions and fuel-economy standards that could have hurt the short-term profitability of automakers. In the past year, he advocated for five bailouts for GM and Chrysler.

"I was fighting for autoworkers long before I met Deborah," he said. "The fact is that I am not married to the auto industry, but I am elected to represent the people of Michigan and in our part of the country. My people live and die by the success of the auto industry and manufacturing."

Although Dingell has one of the starkest conflicts in Congress, he is not alone. Congressional stock ownership has soared over the past two decades. To prevent economic collapse over the past year, Congress has staged an unprecedented intervention in the private sector, meaning more and more lawmakers are voting on measures that could affect their personal wealth. For example, the government today owns 60 percent of GM.

Yet the ethics system on Capitol Hill requires little more than annual public disclosure of financial assets and transactions. And it allows lawmakers to largely police themselves and to decide whether their investments pose conflicts.

Dingell, now 83 and the longest-serving member of the House, said he handles conflicts by following his conscience, informed by the lessons from his father and from the tough-minded Jesuits who mentored him in high school.

He and his wife say they scrupulously follow ethics rules and do the right thing even when it harms their financial status, including taking avoidable losses in their GM stock last year as the company spiraled toward bankruptcy.

"I am extremely paranoid and I am careful," Debbie Dingell said in an interview. "Spouses have no official standing on the Hill, but we face enormous scrutiny."

But some environmentalists and government watchdog groups say the current system fails both the Dingells and the voters.

"The Dingell family is receiving a very healthy salary from a company he is expected to regulate," said Craig Holman, a government affairs lobbyist for Public Citizen, which has led efforts to pass most of the modern-day congressional ethics reform laws. "It's a very serious conflict of interest. Just telling people about the conflict, through financial disclosure, is not sufficient."

The auto industry's advocate

In 1955, John D. Dingell Jr. took over the seat left empty by the death of his father, Rep. John D. Dingell Sr. Two years later, Dingell began forming his power base on what would become the Energy and Commerce Committee, which oversees the auto industry.

Dingell quickly made a name for himself as a conservationist, the author of key wetlands protections. But his environmentalism collided in the 1970s with his desire to protect struggling automakers, which included GM, at the time the largest carmaker in the world. He led efforts to blunt pollution controls in 1977 in the debate over Clean Air Act amendments that would have affected the auto industry.

The next year, Dingell voted for the Ethics in Government Act, a post-Watergate measure that for the first time required members of Congress to disclose their financial portfolios, including their spouses' jobs and their stock holdings.

The new law left members broad discretion over how to handle potential conflicts of interest, and it allowed for waivers, which lawmakers have routinely sought. As a newlywed, Dingell in 1981 asked for an exemption from the House ethics committee to withhold details of his wedding gifts. In a letter, Dingell wrote, "Such gifts are not extended for a business purpose nor should they be construed as posing a conflict of interest or interfering with the impartial judgment of official duties."

For her part, as an ethics safeguard, Debbie Dingell voluntarily stepped down as a registered GM lobbyist.

"Her instincts were good enough that she just assumed that wouldn't work, so she terminated that," the congressman said. "I never had to raise it."

A granddaughter of a founder of GM's Fisher Body division, she eventually moved to the company's public relations division, working out of offices in Washington and Michigan. She kept in her name GM stock valued at $15,000 to $50,000, and her job came with options to receive more.

Ten months after they married, Dingell led another successful effort to weaken auto emissions standards. Protesters held wanted posters with his face on them, describing him as "the congressman from GM and Ford."

He continued to fight against new regulations for air bags, seat belts and tailpipe emissions. When challengers surfaced, such as Sen. Richard Bryan (D-Nev.), who tried to raise fuel-economy standards, Dingell pushed back. He introduced a bill to put a nuclear waste dump in Nevada.

"Dingell could impose his own parochial interests on policy better than anyone," said Frank O'Donnell, executive director of Clean Air Watch. "He scared the living daylights out of people. He usually got his way."

He also collected tens of thousands of dollars in campaign contributions from the auto industry, with GM leading the pack.

The Dingells said they took steps to ensure they meticulously followed ethics laws. In the mid-1980s, the couple hired high-profile lawyer Bob Bauer, who has represented President Obama and in November was appointed White House counsel. Dingell said he hired Bauer "to keep a whole skin on me," adding: "I don't intend on doing something stupid and end up with a mess on my hands."

Bauer also helped Debbie Dingell with ethics seminars she organized for congressional spouses. "I'm seasoned, and I'd like to spare others from mistakes," she said. "It's a harsh place."

Ethics rules allow spouses to have jobs in areas that touch on lawmaker activity, in contrast to the administration and the private sector, where rules limit how family members can work together. Lawmakers are not required to abstain from voting, nor are they required to divest themselves of stock when conflicts arise.

Congress, however, has passed laws requiring that judges recuse themselves from cases when they own as little as $30 in stock in a company with a case before them. In public accounting firms, such as at PricewaterhouseCoopers, high-ranking officials are not allowed to own stock in companies that are clients of the firm. Cabinet secretaries and other presidential appointees are not allowed to own stock in companies their agencies regulate.

Even when lawmakers such as Dingell hold leadership positions, which give them increased power to shape legislation that could possibly affect their personal fortunes, they face few restrictions. Lawmakers must recuse themselves only if their efforts cause them to become the sole beneficiary of any financial gain that resulted from their work.

Debbie Dingell's job at GM ultimately involved being both vice chairman of the company's foundation and executive director of its public affairs division. Ethics laws do not require that spouses publicly disclose their salaries, and Debbie Dingell declined to release that information to The Washington Post. The couple said they had a personal "firewall" between their jobs and didn't share confidential information or lobby each other.

Without question, the Dingells' personal fortune grew as a result of the rising value of her GM holdings. Debbie Dingell also received equity periodically as part of her GM compensation.

On April 14, 1998, for the first and only time, she cashed in stock options worth $500,000 to $1 million, records show. At the height of the couple's holdings in 1999, Dingell's financial disclosure lists her assets as between $115,002 and $300,000 in GM stock, between $500,000 and $1 million in a company stock-purchase program, and between $1 million and $5 million in stock options.

Disclosure statements show that the value of her holdings dropped in subsequent years, although the cryptic forms leave the reason unclear. Although Debbie Dingell declined to discuss her holdings in detail, she said she largely held on to her GM assets until her financial manager liquidated them shortly before the company's bankruptcy, when shares were selling for 75 cents and $2 a share. At its height during their marriage, GM stock was valued at $93 a share in 1989.

During the early 2000s, Debbie Dingell continued to be called a GM lobbyist in news reports, a label that made her bristle, and she sought and received corrections on that point.

Yet she remained an influential industry advocate. She was a board member in 2001 for the Alliance of Automobile Manufacturers, an industry trade group that spends millions each year lobbying Congress. That year, she accompanied GM chief executive Rick Wagoner to a private meeting with then-Energy Secretary Spencer Abraham to discuss the company's position on fuel-economy standards, a copy of Abraham's schedule shows.

At the time, Debbie Dingell played down her role in the meeting, saying she was merely "accompanying the boss" and did not actively participate.

Challenge to the chairman

Even a special relationship with a powerful lawmaker could not forestall market forces. The Dingells' stake in GM faltered along with those of millions of other investors in September 2008, when a global financial meltdown sent the company's stock into an unprecedented free fall.

The congressman once again stepped in to help the company.

As the Energy and Commerce chairman, Dingell advocated a government bailout of the auto industry. He wrote letters, made floor speeches and engaged in horse-trading, offering votes for climate-change legislation in the energy committee in exchange for support for a "Cash for Clunkers" program.

His longtime advocacy came with a price when Rep. Henry A. Waxman (D-Calif.), a proponent of climate-change legislation, started a campaign to oust Dingell from his chairmanship.

The normally towering, 6-foot-3-inch Dingell, recovering from a knee-replacement operation, fought the challenge from a wheelchair. He was gaunt, frail and tethered to a phone as the 5-5 Waxman visited to lawmakers' offices.

In a radio interview, Dingell called Waxman an "anti-manufacturing, left-wing Democrat." Waxman branded Dingell "a determined opponent on clean air, climate change and energy issues."

Debbie Dingell joined her husband as part of his "war council," with daily meetings and conference calls with former staff members and other volunteers.

The GM ties hurt Dingell. Bloggers suggested he was "married to GM," outraging his supporters.

"This is a guy who wrote the Clean Air Act and the Endangered Species Act, but the entire campaign was focused on his relationship to the auto industry," said Josh Tzuker, a lobbyist and former Dingell legislative director.

Waxman's 10-day campaign ended on Nov. 20, 2008, when House Democrats filed through the caucus room's immense wooden doors to cast anonymous ballots. Dingell fell 15 votes short of keeping a leadership position he had held for 16 years.

Both sides acknowledge that Waxman won over Democratic newcomers who had little love for the auto industry.

"These bailouts were not rewarding energy independence. They were rewarding bad behavior," said Tom Perriello (D-Va.), who has not disclosed how he voted in the leadership fight. "People want a system that rewards efficiency and innovation, not failure."

The setback did not deter Dingell from his industry advocacy. He continued to push for funding for GM and Chrysler. In January, he wrote to Obama and argued for grants for automakers in the $787 billion Recovery Act, ultimately securing $105 million for GM.

Dingell successfully pushed for at least five bailouts for GM and Chrysler, records and interviews show.

The largest was through the Troubled Assets Relief Program. Although the bill was not originally intended to help the auto industry, GM eventually received $63 billion and Chrysler got $24 billion, making them the largest recipients behind the banks.

In shepherding the Cash for Clunkers program, Dingell helped kill a rival bill that had stronger fuel-efficiency requirements for replacement cars bought with program funds. With his negotiations on Waxman's climate-change bill, Dingell steered some revenue from pollution permits to finance $21 billion in upgrades to automakers' assembly lines. (The climate-change bill has passed the House but not the Senate.)

"Do you know what would have happened to my constituents if those companies had gone under?" said Dingell, whose home state has 15 percent unemployment, the highest in the nation. "I went through the Depression as a boy. My mother had to put paper into her shoes and walk around in the snow. . . . We had people starving to death. Do you think I'm silly enough to let that happen again?"

Selling her stock

Even with Dingell's help, and bailout funds in hand, GM declared bankruptcy in June.

The stock value had fallen precipitously in the previous 10 months, and Debbie Dingell was caught in a dilemma.

Selling her stock earlier would have opened questions of whether she was motivated by insider information from her husband or her company. So she kept the stock as her husband fought to rescue GM -- and skeptics cast his actions as a battle to save their personal fortune.

"No matter what, people were going to say something," she said.

"Frankly, she rode that stock right into the ground," John Dingell said. "She did that because she had to."

In August, Debbie Dingell -- who has built her own political credentials in the Michigan Democratic Party and is sometimes mentioned as a possible successor to her husband -- left GM after 32 years. "I was hoping to finally put this conflicts question behind me," she said.

But she won't be leaving the industry behind. In October, she was hired as a consultant for a new nonprofit trade group, the American Automotive Policy Council. Her salary, which she declined to disclose, will be paid by the group's founders: GM, Ford and Chrysler.

The organization will be headed by auto industry lobbyist Stephen Collins, who said Debbie Dingell was hired largely to devise a public education campaign to promote manufacturing and the auto industry. She will not lobby for the group, nor will she advocate on public policy matters, Collins said.

Asked about the continued potential conflicts, she said it is difficult for a congressional spouse to find work in Washington without such entanglements.

"Are spouses allowed to work?" she asked. "I stayed at GM so no one could say I got my job because of my husband."

As Dingell approaches his career's end, he said the search for ethical perfection will always come down to conscience rather than law.

"The last perfect set of laws came down off the top of Mount Sinai, written by the finger of God on two stone tablets," he said.

Staff writer Paul Kane, database editor Dan Keating and staff researcher Madonna Lebling contributed to this article.

Kimberly Kindy is a government accountability reporter at The Washington Post.
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