Durbin at front on Wall Street reform

Senate Majority Whip Dick Durbin (D-Ill.) is carving out a role as one of the chief defenders of the Wall Street reform law.

Senate aides and consumer advocacy groups say Durbin’s involvement will be critical at a time when the law, a signature Democratic achievement of the last Congress, is under attack by Republicans. 

Proponents of Wall Street reform say Durbin will fill a void left by the retirement of the former Banking Committee chairman, Chris Dodd (D-Conn.), who helped craft what became known as the Dodd-Frank law. 

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Durbin scored one of the biggest legislative achievements of his career when he successfully attached an amendment on so-called interchange fees to Dodd-Frank last year. Credit card companies and banks strongly opposed the measure.

A senior Senate Democratic aide said, “Durbin played a pivotal role in winning some of the most important Wall Street reform debates over consumer protections, including the Consumer Financial Protection Bureau.” 

As Durbin attempts to beat back GOP efforts to water down or defund the law, Durbin’s colleague and housemate Sen. Charles Schumer (N.Y.) is taking over the Senate Democratic messaging operation. Schumer, the Senate’s No. 3 Democrat, has spent the early days of the new Congress defending President Obama’s healthcare reform law.

Schumer, who has been seen by some on Capitol Hill as a rival to Durbin, deferred to the Illinois Democrat at a press conference last week when asked about GOP efforts to gut the law.

Durbin said he is concerned about efforts to undermine the law by starving the Securities and Exchange Commission (SEC) and Commodity Futures Trading Commission (CFTC) of funding. 

“I’m worried about that,” he said before the Senate adjourned for a two-week recess.

“There are many Republicans who did not support Wall Street reform who believe that they can starve the SEC into submission by refusing to put enough people, personnel — lawyers and accountants and others — monitoring the activities of the exchanges,” Durbin added. “That, to me, is extremely shortsighted.” 

As chairman of the Appropriations Committee's Financial Services and General Government subcommittee, Durbin is vowing to fight to give the agencies the funding they need to hire new employees to enforce the law.

He will also work to defend the Consumer Financial Protection Bureau, a reform he touted for years before it became part of Dodd-Frank.

House Financial Services Committee Chairman Spencer Bachus (R-Ala.) has said that federal regulators should serve the banks and called for rigorous oversight of the financial protection bureau, which Democrats say is a sign Republicans will try to curtail its power. 

Senate Republican aides said Democrats should expect an effort to defund the implementation law, which most of the GOP opposed. 

“That should not be any surprise, because Republicans worked to defeat it,” said a senior GOP aide.

Republicans are emboldened by the retirement of Dodd.

“It’s an interesting dilemma for that whole bill,” said the GOP aide. “Now that Dodd’s gone, who’s going to spearhead the effort to make sure it actually gets funded? He was the godfather of the law.”

Senate aides expect Durbin to debate a wide range of issues this year. But with Schumer at the helm of the Senate Democratic message machine, Durbin is exploring a new type of leadership role in the 112th Congress. 

Durbin was one of three Democratic senators to serve on Obama’s fiscal commission. He surprised activists on the left by voting for a proposal to cut spending and overhaul the tax code to save nearly $4 trillion over the next decade. Liberals panned the proposal, and Rep. Jan Schakowsky (D), Durbin’s Illinois colleague, voted against it.

The 66-year-old senator will be in the middle of talks to strike a grand bargain on reducing the federal deficit. Yet preserving Wall Street reform will be a key facet of his portfolio.

Consumer advocates say Sen. Tim Johnson (D-S.D.), who will take over as chairman of the Banking panel, has been cozy with the banking industry. He was initially skeptical of a call by consumers groups to require companies that sell securities to have a fiduciary responsibility to their clients.

Another concern of consumer advocates is William Daley, who was recently tapped by Obama to become White House chief of staff. Daley earned millions of dollars as a senior executive at JPMorgan Chase, which opposed the centerpiece reforms of the law.  

Durbin does not sit on the Banking Committee, while Schumer, who formally ranks just behind Durbin in the Democratic leadership, is a member of the panel.

However, Durbin could have an advantage defending Wall Street reform from outside the Banking Committee, freeing him from pressure to support Johnson in panel deliberations. 

In an effort that could have a significant effect on Dodd-Frank, GOP leaders in the Senate and House have endorsed rolling federal non-security discretionary spending levels to inflation-adjusted fiscal 2008 levels.

Senate Democrats say that would result in layoffs of hundreds of staffers at two of the agencies responsible for implementing the Wall Street reform law: the SEC and CFTC.

Republicans last month forced Senate Majority Leader Harry Reid (D-Nev.) to shelve a $1.1 trillion omnibus spending bill that included funding for the implementation of Wall Street reform.