Summer has become the season of town hall meetings. Last August, a vociferous health care debate at these local confabs took members of Congress by surprise when they returned home for their annual summer recess. Now, legislators are embroiled in a chaotic committee process with all the same characteristics -- over-crowding, lost tempers and a major policy proposal on the line -- to resolve the financial reform bill.
Conference committees that bring together senators and representatives to harmonize different versions of legislation aren't used as often as they once were, if only because Senate minorities generally object to the majority-favoring process. Few have attracted as much attention as the current effort, which is receiving extensive press coverage and interest due to a public suspicious of bank lobbyists, corruption and back-room deals.
The degree of access is so unusual that congressional staffers arranged a special briefing last week to run reporters through the complex process, which gives significant discretion to the committee's chairs during a complex negotiation among some forty-three members.
Much of Tuesday's activity was procedural sniping, as Republicans sought to de-legitimize the outcome of a process they're largely unable to affect. Conference Chair Barney Frank lived up to his reputation as a debater, snarkily dispatching Republicans who protested that they had not received sufficient time to review the legislation under discussion -- perhaps a few more weeks of hearings are necessary? No, says Frank, these provisions have been discussed extensively.
The Republicans have a point, though: The process is messy and details can easily be lost as delegations from the House and Senate negotiate each title of the bill. While the GOP tries to run out the clock before Congress' self-imposed deadline of passing the bill by July 4, reformers worry that damaging loopholes will be slipped into a bill during the race to the finish.
Negotiations proceeded with aides -- and eventually Frank himself -- circling the room to distribute piles of freshly photocopied proposals, creating plenty of confusion that multiplied as competing offers were passed back and forth (sample document title: "Senate Counteroffer Offer"). Sen. Christopher Dodd at one point had to withdraw an offer he made on behalf of the absent Sen. Blanche Lincoln because she apparently changed her mind. Even non-partisan staff got confused; a clerk reporting a vote accidentally assigned a victory to the Republicans. "The clerk will report again!" Frank demanded, and the clerk transposed the Yeas and Nays to give the outcome to the Democrats.
Intra-chamber rivalries flared as senators and then House members trooped out of the meeting to vote on other legislation. This lead to confusion in the evening as Frank and his conferees strolled out, ignoring questions from Dodd about whether they would return that night or the next morning. (Eventually, the House members returned to finish the day's negotiations, although a few provisions were left for staff to work out.).
Keep in mind that this was supposed to be the easy first day: Most of the policies discussed were comparatively minor, and the major point of contention was ratings agency reform. The House objected to a provision authored by Sen. Al Franken in the Senate legislation, which would create a panel of industry representatives, supervised by the SEC, charged with preventing conflicts of interest between ratings agencies and their clients. Those conflicts played in part in so many toxic financial products being considered safe before the crisis.
An all-day fight ensued behind the scenes among Democratic members of the Senate delegation over whether to protect Franken's idea or accept the House's language. Franken's proposal, despite a strong vote in the Senate, is still viewed skeptically by some Democrats because it preserves the existing ratings agencies and by others because agencies have lobbied hard against it. Eventually, a compromise was brokered, directing the SEC to implement Franken's plan -- after a year-long study. It's a classic Washington agreement, at once meaningless and damaging since regulators could ignore legislators' intent after public scrutiny subsides.
"Today's compromise is not everything we wanted, but it's a major step in the right direction," Franken said later. "The language agreed on by the conference committee means more time and more study than I think is necessary, but it also means definite action will be taken."
Despite this major setback, some rules that seemed in jeopardy were preserved, including requirements that private equity and venture capital investors register with the Securities and Exchange Commission.
Financial sector lobbyists are reportedly feeling squeezed out of the action, saying they can't get meetings with key committee leaders who are taken up with the laborious work of conference. Other members of Congress fear the increasing scrutiny of their relationship with financial lobbyists as organizations like the Sunlight Foundation track donations and the Office of Congressional Ethics launches an investigation into half-a-dozen House members for fundraising connected to their votes on financial reform.
For all that, the loss of Franken's reform doesn't bode well for an inspiring finish. Many other truly contentious provisions -- including efforts to audit the Fed, limit the role of risky derivatives and restrain speculative investment -- were backed by legislators who aren't on the conference committee and must trust their colleagues to get them over the final hurdle. If those important ideas suffer the same fate as ratings agency reform, we'll be in for another long, hot summer of bailouts in the not too distant future.
