Dems Play Old School Hard Ball

May 23, 2010 16 Comments ›› Pat Dollard

Politico:

To finish the Wall Street reform bill, Democrats are resurrecting a casualty of Washington’s hyperpartisan culture: the House-Senate conference committee, in which lawmakers from both parties will hash out differences between the two chambers’ bills.

House Financial Services Committee Chairman Barney Frank (D-Mass.) even wants C-SPAN there, he said, to capture their decision making — and expose members who vote with Wall Street.

“Money is influential, but votes will kick money’s ass any time they come up against each other,” Frank said. “In the Senate, once public opinion got engaged, it blew away the lobbyists, the money, campaign contributions. Public opinion drove that bill.”

Proponents of this approach say it could be a 180-degree shift from the endgame negotiations on health care reform, which took place entirely behind closed doors and involved only Democrats.

But is it?

All of the negotiations will continue to take place in private, with squadrons of lobbyists for financial firms trying to grab their last chance to shape the legislation.

“The House and the Senate will have one more opportunity to fix this legislation, and we will be engaged in that process,” said David Hirschmann, president and CEO of the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness.

When lawmakers are ready to ratify their decisions, Frank said they will go into an open session to debate and vote on changes to the bill. He called this kind of conference “old-fashioned” — and it would be a notable change from recent past practice in Congress — but it might be only a daylong session at the end of weeks of closed-door talks.

And if you’re anticipating a quaint throwback to a less partisan Capitol, think again.

The balance of power on the conference committee overwhelmingly favors Democrats, who need only a majority of House and Senate members on the committee to agree to the conference report. This leaves little incentive for Democrats to engage in meaningful negotiations with the Republican conferees — a group likely to be made up entirely of members who opposed the bill.

Only four Republicans in the Senate — and none in the House — voted for Wall Street reform. Democrats are more likely to look to these Republicans as a barometer for how far they can push the bill than the conferees appointed by Senate Minority Leader Mitch McConnell of Kentucky and House Minority Leader John Boehner of Ohio.

Neither leader has announced his picks, but they are usually drawn from the committees with jurisdiction over the bill — and only one supportive Republican, Iowa Sen. Chuck Grassley, falls into that category.

The traditional battle lines for a conference committee are House vs. Senate, with members advocating on behalf of the bill each chamber produced. But senior congressional Republican aides acknowledge their members will not defend a bill they overwhelmingly opposed and do not expect a meaningful role in the closed-door talks.

“Democrats will try to get together and work out differences on their own, and the White House will be involved,” said a senior Senate Republican aide. “And then they will try to offer a manager’s type of amendment and move it.”

Republicans embraced the conference committee and Frank’s C-SPAN pledge because it gives them one more public platform to press their vision of reform — and score points.

As they did during the health care debate, Republicans plan to box Democrats into a corner, calling for a level of transparency that neither party has ever practiced and hitting them when they fail to live up to it. The line of attack has worked effectively in an election year when voters are suspicious and angry about government.

Boehner called on House Speaker Nancy Pelosi (D-Calif.), in a letter Friday, to “support bringing sunshine to the legislative process.”

“This subject is too important and affects too much of our economy to be written in its final stages by a select few Democrats and lobbyists behind closed doors,” Boehner said. “Republicans believe the American public is demanding — and deserves — the opportunity to understand what is in — and not in — the laws we enact.

“The American people asked for an open and bipartisan process on health care and were denied,” Boehner said. “We cannot allow a similar closed process on financial regulatory reform.”

Michael Steel, Boehner’s spokesman, said he is demanding the “most transparent process possible.”

But Frank has already laid down boundaries.

“The negotiations will go on in private,” Frank said, “but the results of any discussion are going to have to be voted on. The House will vote to offer this in the Senate, all of the decisions will be made, accommodations may be reached privately — that’s where human beings work — but nothing will be ratified without a public debate.”

Because the Senate debate received so much attention, “the big banks didn’t win anything that they shouldn’t have won,” Frank said.

But that won’t stop all sides — including the administration — from pressing hard to shape the bill, including blunting some of its rougher edges.

The Chamber of Commerce has identified two provisions as its top priorities — eliminating the Senate bill’s requirement that banks spin off their derivatives operations and blunting the independence of a new consumer financial protection agency.

Wall Street’s biggest fight will be over Senate Agriculture Committee Chairwoman Blanche Lincoln’s derivatives ban. “We’re simply not convinced that the Lincoln provision will come out in conference, despite what the administration might be telling you,” said one financial services lobbyist.

And as for their strategy, the lobbyist said, “I think the strategy on derivatives is political. They’re going to need to wait until after June 8 [Lincoln’s primary], to get the political will to do something about this. They’ve all said that they understand it’s bad policy. So it’s a matter of politics now.”

The White House will fight any further carve-outs for specific industries from CFPA oversight and will press hard to undo an exemption written into the House bill for auto dealers.

On derivatives, the White House is concerned about more firms and industries seeking exemptions from a requirement that all derivatives are cleared by a third party, arguing that they are “end users” who are just hedging normal business risk. They want to make sure that stays narrowly tailored and that more firms aren’t able to talk their way into the end-user category.

Also, the administration will look to preserve the compromise on an amendment by Sen. Bernie Sanders (I-Vt.) to audit the Federal Reserve. Under the Sanders amendment, the audit would be limited to emergency lending programs since 2007 and would not compromise the monetary authority of the Fed. It will resist any efforts by members to expand the audit-the-Fed measure.

William Galston, senior fellow for governance studies at the Brookings Institution, said that, given the relatively civil and bipartisan nature of the Senate debate, the Wall Street bill offers an opportunity to do conference committees the way they used to be.

“In the olden times, it was conventional to have [a] bipartisan conference committee. In the past decade or so, conference committees, whatever their formal composition, were dominated by the majority,” Galston said. “The majority would caucus by itself, work things out and just bring it to the formal conference committee in a way that gave the minority no serious voice.

But, he added, “these are the classic cirucmstances that call for a serious conference. Democrats have an incentive to include willing Republicans.”

Eamon Javers contributed to this report.