The fate of Congress' massive financial reform overhaul now rests in the hands of a few select lawmakers—top Democrats and Republicans from the House and Senate. Starting Thursday, this small group has two weeks or so to merge 3,000 pages of dense, overlapping legislative text into a single bill to deliver to President Obama.
These same lawmakers also happen to be among the most well-connected to Wall Street, big banks, and their lobbyists in Washington—that is, the very industries they're seeking to regulate. A review by Mother Jones of lobbying records shows there are 70 current or former financial lobbyists who've previously worked in the Capitol Hill offices of these lawmakers. The lawmakers participating in the conference process with the most Hill staffers-turned-finance-lobbyists include Sen. Chris Dodd (D-Conn.), the banking committee chairman; Sen. Richard Shelby (R-Ala.), banking committee’s ranking member; and Sen. Charles Schumer (D-NY), a longtime ally of Wall Street.
The close ties between the financial reform conferees and finance lobbyists are a stark reminder of how much clout Wall Street has here in Washington, and how ingrained the big banks are in the legislative process. A recent report (pdf) by the Public Accountability Initiative, titled "Big Bank Takeover," put it this way: "The big banks have employed an unrivaled network of in-house lobbying teams, hired guns, industry associations, front groups, and behind-the-scenes influence peddlers with deep connections to Congress and the Obama administration, including the leadership of the House financial services committee, the Senate banking committee, the Treasury Department, and key regulatory agencies."
The American people are about to get a glimpse of the negotiations in which top Democratic and Republican lawmakers will merge their two financial reform bills into a final product to send to President Obama. But not the full picture. C-SPAN will only be televising tomorrow's opening day of the financial reform conference. The rest of the process will be available via a grainy, unpredictable webcast on the House financial services committee's website.
Enter Rep. Barney Frank (D-Mass.), chairman of the financial services committee. Frank, who'll be leading the conference process, wants C-SPAN to be in the room as much as possible, at all the public sessions and conference committee votes. Today, on the eve of the conference's opening, Frank wrote a letter to C-SPAN chairman Brian Lamb urging him "to provide the necessary resources to ensure that the American people are able to watch the public portions and the voting of the Conference Committee."
Democrats see C-SPAN's presence as a chance to expose those shilling for Wall Street and other financial players. The spotlight also gives lawmakers the chance to rail against colleagues who try to obstruct the process or blunt tough new reforms. Senate Majority Leader Harry Reid (D-Nev.), for instance, took every chance he could get during the Senate's financial reform debate to bash GOPers as "making love to Wall Street" and paint their obstructionist tactics as "anti-American." If Democrats grow equally exasperated with GOPers during conference, watch for similar kinds of criticisms.
Full broadcasting of the conference process would also bolster Obama's claim that he wants full transparency for all his big legislative battles. As many remember, the president promised that the health care debate would be entirely out in the open and then reneged on that promise, for which he was strongly criticized. Making sure the television cameras are at every public session and vote for financial reform could restore some faith in Obama's transparency pledge.
Here's Barney Frank's full letter to CSPAN's Brian Lamb:
June 8, 2010
Dear Mr. Lamb,
Thank you for committing the necessary resources to provide gavel-to-gavel coverage of the opening day of the historic House-Senate Conference on the Wall Street Reform and Consumer Protection Act. As we move forward, I urge you to provide the necessary resources to ensure that the American people are able to watch the public portions and the voting of the Conference Committee. I believe it is vital that after the financial crisis of 2008, the American people are able to view the public proceedings. I thank you for your consideration of my request.
Here's a takeaway from Arkansas Sen. Blanche Lincoln's surprise primary victory last night: Taking a tough stance against Wall Street and big banks can pay dividends on election night. It looks like California Attorney General Jerry Brown has learned a thing or two from Lincoln, sending a letter to House Speaker Nancy Pelosi (D-Calif.) on election day yesterday exhorting her to include tough consumer protections and beefed up powers for state AGs in the final financial reform bill. Yesterday, Brown won the Democratic gubernational nomination for California in a blowout, with 84 percent of votes.
In his letter, Brown identifies two keys areas of financial reform that he sees as crucial to any reform bill. First, national banks and state-based banks should be subject to the same state consumer protection laws. (Right now, national banks are not subject to those state-based laws.) And second, Brown wants state AGs to have the power to enforce their state's consumer protection laws against both national and state banks. Right now, national banks are preempted from state-based regulations, which allowed big banks in the past to escape predatory lending laws in states like Georgia. (Mike Konczal has a great post explaining this issue here.)
For Brown, prodding Pelosi to ensure strict consumer protection laws is a win-win scenario. As a veteran state attorney general, he gets to empower his position as much as possible. And as a gubernatorial candidate facing a wildly popular Republican opponent, Meg Whitman, he knows that backing financial reform is great for his optics. The question is, who'll be the next candidate to jump on the Wall Street reform bandwagon?
Here's Brown's full letter:
Dear Speaker Pelosi:
In anticipation of a compromise on the House and Senate financial services reform bills, I urge you to press for the strongest possible language to protect consumers and our economy from another debilitating crisis caused by reckless Wall Street banking practices and complicit federal regulators.
Two elements of a compromise bill are key to that protection. One, national banks should be subject to the same state consumer protection laws as state banking institutions and virtually a! ll companies operating in industries other than financial services. And, two, state attorneys general should have the authority to enforce all applicable consumer protection laws against national banks.
The House language is preferable on both points, and I recommend that you push for its adoption. It would establish a higher burden for the OCC to preempt state consumer protection laws. It also would allow state attorneys general to enforce all federal consumer protection laws against national banks, not just regulations that may be adopted by the new Consumer Financial Protection Agency.
Despite a barrage of attack ads from labor unions, opposition from the left, and dwindling momentum in recent weeks, Sen. Blanche Lincoln bucked the year’s anti-incumbent mood and won Arkansas' Democratic US Senate run-off election Tuesday night. She claimed 51 percent of votes, while her opponent, Lt. Gov. Bill Halter, fell just short with 48 percent, according to an Associated Press projection. The odds were tilted in Halter’s favor, with Lincoln trailing by 4 points in a recent R2000/Daily Kos poll before tonight’s run-off.
So what’s behind Lincoln’s surprising win? For starters, scoring the endorsement of Bill Clinton, the rock star of Arkansas politics, turned out to be a big boost for Lincoln. It also stands as a reminder of how valuable the Clinton touch remains when it comes to election season.
Lincoln was also helped by her anti-Wall Street, populist blitz on financial reform. The Arkansas senator shocked many experts, colleagues, and the banking community by producing a last-minute, surprisingly tough proposal to crack down on derivatives, the tricky financial products that helped explode the economy—and which are a cash cow for big banks. Her measures to rein in derivatives trading and force the likes of JPMorgan Chase and Bank of American to break off their lucrative derivatives trading operations have faced attacks from all sides—Republicans, fellow Democrats, the White House, banks—yet those proposals might still make it into the final bill that lands on Obama’s desk, especially now that she’s prevailed in her primary race.
Halter wasn't the only loser in this contest—labor unions threw serious campaign muscle behind him. Indeed, as our own Suzy Khimm reported, labor took full advantage of slackened campaign finance laws, thanks to the Supreme Court's Citizens United decision, to rally behind Halter. Unions deployed "express advocacy" ads—which urge viewers to vote specifically for or against a certain candidate—using their own general funds, something they couldn’t do a year ago. And even then, they couldn’t push their man over the top. As a senior White House official told Politico's Ben Smith on Tuesday night, "Organized labor just flushed $10 million of their members' money down the toiled on a pointless exercise...If even half that total had been well-targeted and applied in key House races across this country, that could have made a real difference in November."
Not that the road ahead for Lincoln is easy. Her likely opponent this fall, Republican Rep. John Boozman, commands a 20-point lead in the latest poll by R2000/Daily Kos. Other polling has put Boozman ahead of Lincoln in a hypothetical fall matchup by anywhere from 17 points to 38 points. Which is to say, Lincoln’s got her work cut out for her in the next five months to translate her surprise victory tonight into reelection.
Suspiciously timed allegations of extramarital affairs in the weeks before tonight's primary couldn't stop Republican gubernatorial candidate Nikki Haley. Endorsed by Tea Party favorite Sarah Palin, Haley all but swept aside the salacious claims of infidelity made by a conservative blogger and South Carolina political consultant, and scored a dominant victory tonight. Forty-nine percent of Republican voters chose her, while the next highest vote-getter, Rep. Grisham Barrett, received less than half that, with 22 percent support.
But would Haley have reached or surpassed the 50 percent mark without the affair allegations? If she'd cleared this hurdle, she would've surpassed the threshold requiring a run-off vote against the number two candidate in the primary. Instead, Barrett will challenge Haley, a Barrett aide tellsPolitico, in a June 22 run-off to decide who gets the South Carolina GOP's nomination for the fall election.
Obviously, Haley would've rather won outright in today's primary and avoided a few weeks of intraparty battling. Worse yet, the 14 days between now and the Haley-Barrett face-off will give the second-place candidate more time to harp on the allegations that dogged Haley in the past two weeks. Then again, if Haley had surpassed 50 percent, she'd likely face similar questions from Democratic gubernatorial candidate Vincent Sheheen, who won today's primary with 59 percent of the votes.
On one hand, Haley's victory is a high-profile win for female candidates on a night in which we'll likely see victories from California's Meg Whitman, a GOP gubernatorial candidate, and Carly Fiorina, a GOP US Senate candidate. Both powerful executives turned Republican politicians, Whitman and Fiorina entered today's primaries leading in the polls, and have a good shot at claiming their respective GOP candidacies.
On the other, as National Democratic Governors Association director Nathan Daschle has said (via Real Clear Politics), Haley's victory is just as much a win for Democrats: "Democrats are the clear winner in both tonight's primaries. The divisive, ugly GOP primary has done nothing but turn off voters who are tired with politics-as-usual. The next two weeks promise a race to the bottom as Nikki Haley and Gresham Barrett battle it out for the nomination."