Last week I wrote about President Obama and losing poorly, about how he loses in a way that doesn’t build toward long-term liberal goals, that leaves his enemies stronger and in control of the narrative while splitting his supporters. I want to talk about this argument and financial reform, specifically how the progressive community was able to overcome it. I would argue that the progressive community fought financial reform well for two key reasons.
A Community of Experts
The first is that Americans for Financial Reform (AFR), Roosevelt Institute, the financial blogosphere and many others found a large number of experts, built them up and deployed them in ways that pushed for stronger concrete changes. On Roosevelt’s end alone, our Make Markets Be Markets conference and Will It Work? How Will We Know? conferences took experts working in a variety of different places and on a number of individual topics and brought them together.
These were experts in their fields who had a different, stronger vision of how the financial sector should be regulated than what was proposed by Treasury. They made strong recommendation, markers for what serious reform would look like. This builds us for the long run, as there are now experts with a strong vision who have been tested in the public sphere, experts that wonks, media, lawmaker and regulators can call on for expertise in the future. That’s building a community.
(It was also fun! Frustrating, hard-work, a complete pain-in-the-ass, disappointing at times, but fun. Matt Stoller pointed that out to me, that this kind of political community building should be fun, along with the smart insight that financial reform battles that are lost need to be lost in a way that builds coalitions. How many liberal groups had a fun 2010?)
Up until this point only regulators and deregulation-minded Washington insiders spoke about these topics. The financial reform effort allowed us to build for the long-run, and these new experts will be deployed again at the next financial crisis and on the next financial issues.
Fighting the Politics
The second is getting serious about the politics. There was a period in the beginning of 2010 where everyone, myself most of all, thought that the Senate financial reform bill would be weak, so weak that it wouldn’t be worth writing about or fighting for. By the time it was over it was surprisingly strong given where it started – very surprising to others as well. Edmund L. Andrews and Katherine Reynolds Lewis:
Bulked Up, Not Watered Down
Industry lobbyists are stunned that the bill became tougher rather than weaker as it progressed through the Senate…Scott E. Talbott, a top lobbyist for the Financial Services Roundtable, which has adamantly fought against many provisions in the Senate bill, sounded almost shell-shocked by the bill’s breadth…
The bill is a major victory for President Obama and a valedictory for retiring Senate Banking Committee Chairman Christopher J. Dodd, D-Conn. Dodd was the guiding force who overcame strong opposition from many Republicans and some Democrats and skillfully navigated past numerous procedural barriers.
There are two specific days on which this changed.
March 11th, 2010: The first was Chris Dodd’s decision to go it alone and release his own bill rather than water it down to get Republican support in committee. This watering down process between Dodd and the Republicans on his committee sent me in a serious depression over the prospects of financial reform. Shelby had walked away from the debate, Corker was trying to play the role to get a bill out, and then Dodd decided to go on his own. He also called for a vote immediately to get it out of conference without calling any amendments. And rejecting fake bipartisanship turned out to be the right decision.
The bill then went to the amendment process in the Senate. Many, including myself, are disappointed that not enough important amendments got a vote in the Senate. But it is important to remember that there was a moment where there weren’t going to be any votes on any amendments. And it’s only through progressive senators demanding votes on amendments that they went to the floor. And only by demanding votes, and forcing Republicans and Democrats to vote for or against Wall Street, was progress able to be made.
April 16th, 2010: Blanche Lincoln had written a derivatives bill that sent everyone scrambling. Everyone. On the second date, April 16th, everything changed because of the derivatives language that was introduced into this bill.
Especially the Section 106/716 language, which would spin out the dealers from commercial banks. Noam Scheiber got this dynamic perfect, noting that all the lobbyist energy had suddenly turned to scrapping this very specific derivatives language, and even with huge opinions against it, it got out of the Senate. This left little time to attack other things. Suddenly progressives were the ones running the clock, not the lobbyists.
What’s important here is that Senator Lincoln didn’t decide to do it randomly. She did it because she had a primary challenger in Arkansas — Lt. Governor Bill Halter, who deserves a lot of credit for stepping up and risking his political career to challenge an entrenched incumbent. Halter was recruited and supported by many local Arkansas Democrats, Glenn Greenwald and Jane Hamsher of Accountability Now, the hundreds of thousands of members of the Progressive Change Campaign Committee, Markos Moulitsas-Zuniga and the Dailykos community, the millions of members of Moveon, and the millions of members of the SEIU and the AFL-CIO. The other team was mobilized as well. The bank-dominated US Chamber of Commerce, was advertised on her behalf in the race.
But it was the people-powered groups that had more power in the primary. Lincoln knew that if she watered down her derivatives language, it would be known and that information would be given to voters. Special thanks are owed to these groups, who deserve a central place at the story for why this Senate bill is so strong, but so far I’ve seen very little attention given to them.
This synergy will continue. It did after the bill with the PCCC and others campaigning to get Warren to the CFPB.
Is the final financial reform bill perfect? No. Is it stronger because of these items? Yes. And what I value the most is that the coalition of financial experts who have a stronger vision of how regulation should work in the financial sector is much more organized that before this crisis hit. We’ll continue to build them for the future, and I hope you’ll help us any way you can.