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Congressional Black Caucus Is at War with Itself Over Wall Street | New Republic
wen Moore does not seem like anybody’s idea of a corporate stooge. The Milwaukee Democrat, a single mom who once survived on welfare, has sponsored efforts to boost public housing, reproductive freedom, food-stamp benefits, Social Security payments, environmental protection, veterans’ benefits, and the minimum wage. And that’s just in the past year.
So it’s strange to see Moore associated with one of the more noxious campaigns underway on Capitol Hill: the Wall Street effort to unravel key sections of Dodd-Frank. After all, the 2010 financial reform was meant to curb the very same excesses that, not so long ago, devastated the economy and put many of Moore’s constituents out of their jobs and their homes.
The assault on Dodd-Frank relies on support from three different groups. The GOP isn’t shy about its antipathy to government regulations, and a pro-business coalition known as the New Democrats has come to its aid. But there is also a third, lesser-known faction: the Congressional Black Caucus (CBC). Moore, along with colleagues like New York’s Gregory Meeks, Georgia’s David Scott, Missouri’s Lacy Clay, and Alabama’s Terri Sewell, has pushed for a host of seemingly arcane measures that would undermine Dodd-Frank’s rules on financial derivatives, the complex contracts at the heart of the 2008 meltdown. She is the co-sponsor of multiple measures that would once again allow Wall Street to shift its riskiest transactions out of the view of regulators.
The CBC is not an organization known for airing its dirty laundry in public. But over the last year, the tawdriness of its pro–Wall Street votes has become so blatant that several members have started to push back, led by Maxine Waters, the veteran Los Angeles legislator who serves as the top Democrat on the financial services panel. To many in the CBC, it feels like a battle for the storied caucus’s soul—and the result could dictate the direction of economic policy for the Democratic Party at large.
“People are sick about what they’re doing,” says one CBC member. “Some things are just uncharacteristic of certain people. Everybody here has a brand. If your brand is down with the people, standing up for the little guy, then all of a sudden you’re on some bills that have got you helping Goldman Sachs have looser regulations on derivatives? It’s like—wait, what the hell is that?”
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About a decade after the CBC’s 1971 founding, some 20 black lobbyists started holding informal gatherings around Washington. The Civil Rights movement had ushered more African Americans into Congress, and those lawmakers brought black staffers with them. Many of them, like former staffers all over Capitol Hill, wound up on K Street.
The CBC had always focused on social justice, but the lobbyists—who eventually named themselves the Second Wednesday Group—had more prosaic aims. “It was just a networking group of African American lobbyists, to maybe be an inspiration for African American lobbyists entering the lobbying field,” says David Warr of the International Trademark Association, who ran the organization in the 1990s. Over time, it built a vibrant community of black lobbyists and Hill staffers.
Today, the organization—now known as the Washington Government Relations Group—is a significant nexus of influence. At its regular policy gatherings, lobbyists can interact with lawmakers and staffers. Last year’s annual gala was held at the French Embassy.
But Capitol Hill is still overwhelmingly white, and even with a former CBC member in the White House, the power class is far from fully integrated. One white former representative told us he was stunned the first time he attended a black colleague’s fund-raiser during President Obama’s first term. “It was very much a standard fund-raiser in a townhouse on Capitol Hill, probably on South Capitol Street, nicely catered, everything was identical, except I was the only white guy there,” he recalls. “There were lots of African American lobbyists, most of them had probably worked as a staffer for somebody, and then they were hired by whoever it was they lobbied for specifically to lobby the CBC.”
The corporate world, by contrast, has been paying close attention. The CBC represents roughly 10 percent of the House and about a fifth of the Democratic minority. That alone makes it an attractive target for lobbyists. But two characteristics have helped it amass particular power. Its aura of moral credibility, earned during the Civil Rights era, can provide valuable progressive cover for controversial measures. And its tradition of voting as a bloc, forged in its early years to avoid marginalization, means that persuading the right CBC member can secure dozens of additional votes.
For the most part, the CBC has used its influence to keep progressive policy priorities on the Democratic agenda. In 2008, it broke with fellow Democrats to kill the first version of the Wall Street bailout. “The poor—poor blacks, poor whites, Native Americans, Latinos—get little help, little assistance,” John Lewis said at the time. “And then they come in here and ask us to bail out Wall Street. I’m not prepared to do that.” The bill only passed after a number of CBC members, led by Waters, extracted a promise from Obama for a major foreclosure-relief program (a promise that was ultimately broken).
However, as one bank lobbyist put it, “Sophisticated companies have sophisticated lobbying operations.” He explains, “Almost every big bank has a lobbyist who has experience and can work with the Congressional Black Caucus.” The industry’s term for these lobbyists: CBC specialists. And by targeting the ten CBC members who sit on the financial services panel, these lobbyists can potentially win over the entire caucus. “We defer to them for advice,” Marcia Fudge, the CBC’s chair, says of the members on the committee. “We don’t really talk about [financial issues] in the [weekly lunch] meetings at all. . . . It’s not an issue that’s of grave importance to the caucus. We know that we have people on the committee that we trust.”
The lobbyist knows first hand how effective this tactic can be. “We go right to the CBC because they are open-minded and they often vote as a bloc,” he says, asking for anonymity because he frequently relies on CBC members for support on deregulation bills. “And the professional left is scared of them. Every white liberal—media, politician, advocacy group—knows better than fukking with a CBC member.”
Outside Washington, people tend to assume that lobbyists are primarily interested in passing—or killing—legislation. But in a divided government where few bills are signed into law, the real action is the tug of war between Congress and the agencies that write rules and implement laws. An interest group can exert pressure on regulators by pushing for a bill that doesn’t even pass—simply assembling the right mix of co-sponsors can send an strong message. Sometimes this method functions as an informal threat: Unless you craft a weak rule, we have the clout to force your hand.
But there’s also a Washington cultural element at play. When a policy looks and feels bipartisan, it becomes tougher for an agency commissioner to take on the supposed consensus. A mere letter supporting or opposing a regulatory policy can have a formidable effect if the right names are on it. When it comes to bank reform, the ideal mix of backers, say lobbyists, is an even split of Democrats and Republicans, with a healthy contingent of CBC members to blunt the ideological edge. Or, if it’s obvious that an issue has full GOP support—any bank-reform repeal, for instance—a letter from Democrats alone will suffice.
After the GOP gained control of the House, the financial sector, according to one senior bank lobbyist, initially relied on a coalition of Republicans and the Democratic Party’s “Three J’s”—Jim Himes, who represents Greenwich, Connecticut, the epicenter of the hedge-fund world; Maryland’s John Delaney, a former banker; and John Carney Jr. of Delaware, a state dominated by the financial services industry.
But Wall Street needed more liberal support. Once everybody got wise to the fact that the Three Js always voted with the GOP on banking, they no longer lent legislation the same bipartisan sheen. (A couple of years ago, we wrote a story in The Huffington Post that framed a Himes bill as a sop to his fellow former bankers, and he left us a furious voice mail that illustrated this dynamic perfectly: After lambasting us for describing him as a “ ‘former Goldman Sachs executive’ as opposed to, say, ‘former affordable-housing, nonprofit guy,’ ” he added, “I will deal for the next couple of weeks with the left of the Democratic Party now thinking that I’m looking to deregulate derivatives.”)
And so bank lobbyists turned to legislators like Moore, the daughter of a factory worker, and herself a former activist for affordable housing. The Three Js now regularly team up with Moore and a handful of other CBC members.
In February 2013, Moore and Fudge joined three Republicans to introduce H.R. 677, a bill that would allow corporate conglomerates to trade derivatives among their myriad subsidiaries without follow-ing Dodd-Frank’s trading rules. The bill infuriated financial reform watchdogs, who say it makes it much harder for regulators to see risks accumulating in the system and could facilitate international tax-dodging. Moore’s measure probably won’t ever get a vote on the House floor, but it doesn’t need to. After proposing a relatively robust rule on the topic, the Commodity Futures Trading Commission switched course last year and finalized a regulation that adheres closely to Moore’s language.