Since the revelations of corporate chicanery began, Congress has treated the public to a series of made-for-TV hearings. Executives may dismiss much of what the politicians say as bombast, but Senator Carl Levin strikes fear in their hearts.
In July, the Michigan Democrat grilled execs of the big investment banks before his permanent subcommittee on investigations about whether they had helped Enron Corp. fool investors. Levin's questioning of J.P. Morgan Chase & Co. (JPM ) execs got so intense that four Citigroup (C ) officials waiting to testify bolted to the hall. Visibly shaken, they argued about what to say once their time came.
It was vintage Levin. In his 24 years in Washington, Levin has made a practice of studying issues to death before he pounces. He "has an interest in minutiae that sets him apart," says Robert S. Tyrer, who was chief of staff under former Defense Secretary William S. Cohen. In fact, Levin can spend years pursuing his quarry, often Corporate America. The 68-year-old Harvard-educated lawyer took six months to sift through Enron documents before his hearings.
Levin is planning more inquiries on the possible role of law firms and financial institutions, including Merrill Lynch & Co. (MER ), in Enron's deception. And he intends to look into abuses of off-balance-sheet structures into which companies can shift debt or assets. As chairman of the Armed Services Committee, Levin is also expected to play a major role in the debate over whether to attack Iraq.
He gets results. After Levin called investment bankers on the carpet, Citigroup CEO Sanford I. Weill announced that his bank won't do deals with clients who want to hide debt from investors. Similarly, J.P. Morgan Chase CEOWilliam B. Harrison Jr. created a new office to determine whether deals might harm the bank's reputation. Weill and Harrison say their banks did nothing wrong.
While he gets poor marks from some business groups for his liberal views, Levin is so popular that the GOP has given up trying to replace him. He's expected to easily win reelection this November. Even those on the receiving end of his probes respect him. His is "one of the most formidable investigating committees in Congress," says Enron lawyer Robert S. Bennett, but disputes a Levin report that partly blames Enron's board for the company's fall. "They tend to be more workhorses than show horses."
Levin sometimes allies himself with Big Business, especially the auto industry. Last spring, with the Senate poised to pass higher fuel-economy standards, he inserted a measure to let the industry-friendly Transportation Dept. decide mileage rules. Environmentalists were irate. "He removed the only guaranteed oil-saving measure in the energy bill," says Katherine Morrison, an attorney at USPIRG, the national lobbying group of the state Public Interest Research Groups.
This fall, Levin may take on President George W. Bush over Saddam Hussein. Levin would prefer to contain Saddam, reflecting his position as a senator from a state with a large Arab population. It's Levin's next Enron foray, however, that has Merrill and others on edge. "When businesses participate in deceptive practices, we've got to change that," Levin says. "It's important to have cops on the beat." In other words, Wall Street, Carl Levin isn't done with you.
By Laura Cohn in Washington