By Alexander Bolton - 05/24/10 10:00 AM EDT
Wall Street reform has become a big issue in Sen. Chuck Grassley’s tougher-than-expected reelection campaign.
Grassley surprised political observers when he voted for tough new restrictions on derivatives trading that passed out of the Agriculture Committee in April.
Grassley surprised observers again Thursday when he joined three centrist Republicans from New England — Sens. Susan Collins (Maine), Olympia Snowe (Maine) and Scott Brown (Mass.) — to pass a sweeping Wall Street reform bill out of the Senate.
Every other Republican senator voted against it.
Democrats believe Grassley sided with them because of political pressure at home.
A Research 2000 poll published May 6 showed Democratic challenger Roxanne Conlin trailing by only nine points and Grassley getting less than 50 percent of the vote in a hypothetical matchup.
“This is a race about a guy who has been on the side of special interests, has received money from the special interests and spent his time opposing real reform,” said John Lapp, a consultant to Conlin’s campaign.
“The question of this race is, ‘Are you on the side of Main Street or on the side of Wall Street?’” he said.
Grassley has a history of crafting bipartisan tax, trade and healthcare legislation, but he is viewed as a mainstream member of the GOP conference.
Other Republicans who are seen as more inclined to work with Democrats — such as Sen. Lamar Alexander (R-Tenn.), a Democratic target on the climate change bill — panned Wall Street reform.
"This bill throws a big wet blanket on the American entrepreneurial system, the real creator of most new jobs,” Alexander thundered in a press release.
“It was supposed to rein in Wall Street, but instead is just another Washington takeover — this time of Main Street — making it harder for plumbers, dentists, community banks, auto dealers, and credit unions to do business," he said.
Conlin has made Wall Street reform a high-profile issue as she travels to all of Iowa’s 99 counties to campaign against Grassley.
“It’s one of the things she has talked about most,” said Mark Daley, Conlin’s campaign manager.
Daley said the campaign has organized 61,000 grassroots volunteers online and that many of them contacted Grassley to press him to vote for the reform bill.
John Maxwell, a strategist for Grassley’s campaign, blasted the accuracy of the Research 2000 poll.
“That poll was a piece of junk,” he said. “It was out of alignment with everybody else’s public and private polling.”
Jill Kozeny, Grassley’s spokesman, said the senior Republican from Iowa has been working to increase government oversight of Wall Street since Congress passed a $700 billion bailout package.
“Grassley has been working to hold Wall Street accountable since winter of 2008,” she said.
Grassley pushed for the establishment of a special investigator general to monitor the Troubled Asset Relief Program, which poured tens of billions into struggling banks.
He also attached an amendment to housing legislation in the spring of 2009 that gave the Government Accountability Office greater power to review what the Federal Reserve did to help big banks.
Conlin still has to win a June 8 primary to secure the Democratic nomination but she is considered the heavy favorite. She promises to give Grassley a much tougher race than when he won his fifth term in 2004 with 70 percent of the vote.
Conlin raised more money than Grassley in the first quarter, but the senator maintains a significant advantage in cash on hand.
Grassley, the senior Republican on the powerful Senate Finance Committee, raised $614,000 during the first three months of 2010 and reported $5.4 million in the bank.
Conlin raised just over $665,000 during the same period and on top of that gave her campaign a $250,000 gift, bringing her cash total to over a million dollars.
Conlin has pledged not to accept any contributions from political action committees or Washington lobbyists to underscore her argument that Grassley is tied to special interests.
Conlin’s advisers say they will press Grassley on his ties to banks and other special interests despite his vote for reform.
“An election-year flip-flop on Wall Street reform can’t hide Sen. Grassley’s record of voting with the special interests for 30 years,” said Conlin consultant Lapp.
Grassley’s campaign team, however, says this line of attack is absurd coming from Conlin, who served as the first woman president of the Association of Trial Lawyers of America.
“She was head of one of the biggest, most powerful special interests in America,” said Maxwell. “It’s laughable that she’s somehow divorced from special interests.”
Maxwell said Grassley has shown his independence from Republican leaders over the years, such as when he split with former President Ronald Reagan on defense spending.
Maxwell noted that Grassley was one of the leaders of the effort to extend Wall Street reform to Fannie Mae and Freddie Mac, the government-sponsored entities that helped fuel the frenzy of subprime lending that led to the crash.
“This is no election-year conversion,” he said.
Sources familiar with Grassley’s internal polling say his numbers show the race is not as close as nine points.
A private Tarrance Group poll from May 11 to May 12 showed Grassley with a 62 percent favorable rating and a 31 percent unfavorable rating. The survey showed his job approval rating at 58 percent compared to a disapproval rating of 32 percent.
The poll showed 36 percent of voters would definitely support Grassley and 17 percent probably would back him. Twenty percent of voters said they would definitely support Conlin and 13 percent said they probably would support her.