The Brown InfidelityJune 21, 2010 - by Donny Shaw
If you look at which senators have been receiving the most finance industry money this electon cycle, the list starts off looking pretty much as expected. New York Senators Charles Schumer [D] and Kirsten Gillibrand [D], who literally represent Wall Street, are one and two. Third in the list is Sen. Harry Reid [D, NV], who, as Majority Leader, holds a lot of influence over the Senate’s financial reform efforts. And after Reid is Sen. Chris Dodd [D, CT], the Chairman of the Banking Committee where the Senate’ financial reform bill was written.
Following Dodd on the list, in the fifth spot, is newly-elected Sen. Scott Brown [R, MA], who holds no official positions of power and is not a member of the Banking Committee with jurisdiction over financial reform legislation. As I wrote in April, “the typical story of Scott Brown’s election to the Senate in MA is that he was put there to kill health care reform. But all the money he’s getting from the finance industry indicates that they may be hoping he will also be the 41st Republican vote to kill financial regulatory reform, or at least parts of it.”
In May, Sen. Brown gave the Democrats the 60th vote they needed to overcome a Republican filibuster of their financial reform bill, but now as it’s going through the conference committee, he’s using his leverage as a crucial swing vote to fight for carve outs that would benefit the financial companies who have been funding him. The New York Times reports:
Industry lobbyists — and sympathetic members of Congress — are pushing for provisions to undercut a central pillar of the legislation, known as the Volcker Rule, which would forbid banks from using their own money to make risky wagers on the market and would force them to sell off hedge funds and private equity units.
To secure the support needed for their bill, Senate negotiators are leaning toward creating a series of exemptions to the Volcker Rule that would allow banks to continue to operate these businesses as investment funds that hold only client money, according to several Congressional aides, industry officials and lawyers.
The three main changes under consideration would be a carve-out to exclude asset management and insurance companies outright, an exemption that would allow banks to continue to invest in hedge funds and private equity firms, and a long delay that would give banks up to seven years to enact the changes.
In particular, the provisions, sought by Senator Scott Brown, Republican of Massachusetts, and several other lawmakers, would benefit Boston-based money management giants like Fidelity Investments and State Street Corporation.
…Fidelity Investments is Brown’s all-time top campaign contributor. OpenSecrets lists “FMR Corp” in the #1 spot on Brown’s page of top contributors. “FMR” stands for “Fidelity Management and Research,” better known as Fidelity Investements, according to Yahoo Finance.
Dealbook adds: “To win Mr. Brown’s support and clear the way for Senate approval, Democratic leaders have pledged to support the carve-out for asset managers, according to officials familiar with the talks.”
And Tim Fernholz asks, why are the Dems looking at weakening the bill to win a Republican vote when they could strengthen it to win a Democratic one:
Assuming that the Senate voting coalition on the financial reform conference report will be similar to that of the original Senate bill, two Democratic Senators — Russ Feingold and Maria Cantwell — could be courted to support the bill in return for strengthening it. Perhaps there is some concern that the two Maine Senators who voted for cloture, Oympia Snowe and Susan Collins, will bolt without a third Republican, but that’s all the more reason to keep Collins’ amendment to increase capital requirements for banks.