Letter to Ronald Weich Assistant Attorney General Office of Legislative Affairs

Letter

U.S. Senator Jeff Sessions (R-AL), Ranking Member of the Senate Judiciary Committee, today joined with Sens. Chuck Grassley, John Cornyn, and Tom Coburn in calling on Deputy Attorney General nominee James Cole to answer questions about his work as an independent consultant overseeing failed insurance giant AIG in the lead up to the financial crisis.

A text of the letter follows:

June 23, 2010

Ronald Weich
Assistant Attorney General
Office of Legislative Affairs
Department of Justice
Washington, D.C. 20530

Dear Mr. Weich:

We write regarding the nomination of James Cole to be Deputy Attorney General. Mr. Cole served as independent consultant to American International Group (AIG) for a number of years prior to that company's near collapse and government-sponsored bailout in 2008. Numerous questions persist regarding Mr. Cole's role in monitoring AIG in view of the company's recent history. Such questions could not adequately be addressed at Mr. Cole's June 15 hearing, however, because Mr. Cole appears to be prohibited from disclosing the nature of his work as an independent consultant and because the underlying documents apparently remain confidential. These documents include the deferred prosecution agreements, his recommendations to AIG, and his reports to the Department of Justice (Department), Securities and Exchange Commission (SEC) and the New York Attorney General's Office (NYAG).

As a result of these claims of confidentiality, we have been unable to verify a number of reports that have questioned Mr. Cole's activities as the independent consultant to AIG. For example, it has been reported that Mr. Cole "allowed AIG management to revise his quarterly reports to the SEC." According to these same reports, Mr. Cole also made recommendations that there be independent review of all derivative transactions, but he expressly exempted derivative transactions made by the AIG-Financial Products group (AIG-FP). AIG-FP is the subsidiary of AIG that was responsible for the derivative transactions that ultimately led to a $182 billion taxpayer bailout. We understand Mr. Cole's recommendation for derivative products by AIG-FP went even farther to state that "the appropriate independent review of the proposed derivative transactions or programs should be conducted by AIG-FP." This recommendation raises serious questions about the thoroughness and independence of Mr. Cole's review of these transactions. It was the devaluation of those high-risk transactions that led to AIG's demise, and ultimately, the economic collapse.

If true, these reports about Mr. Cole's deference to AIG and its subsidiaries would raise serious concerns regarding his performance as independent consultant. Due to the unknown nature of Mr. Cole's work and the secrecy surrounding his recommendations and reports to the Department and the SEC, the Committee remains unable to verify or dismiss these reports.

We understand the confidential treatment of Mr. Cole's reports to the Department, the SEC and the NYAG, and his recommendations to AIG stem from the deferred prosecution agreements between the Department and AIG. The Judiciary Committee cannot, however, fully and properly evaluate Mr. Cole's nomination without this documentation. Accordingly, we request copies of all reports submitted by Mr. Cole in his role as independent consultant to the Department. To the extent the Department received such materials, we further request copies of Mr. Cole's reports to the SEC and NYAG, as well as copies of all recommendations made to AIG by Mr. Cole. Finally, we request all responses submitted by AIG to the Department related to, or responding to, any report or recommendation issued by Mr. Cole as the independent consultant to AIG.

Thank you for your attention to this matter, which will help us to discharge our constitutional obligation to consider this nomination. To avoid any unnecessary delay, we respectfully ask you to provide this information as soon as possible so the Committee can consider Mr. Cole's nomination.

Very truly yours,

Jeff Sessions
Chuck Grassley
John Cornyn
Tom Coburn