Earlier in the week, we mentioned that the dynamic between Senate Banking Committee Chair Chris Dodd and the Republican Ranking Member, Richard Shelby will play a large role in determining what kind of financial regulation reform will come out of Congress. Today, more news of another Banking Committee Duo: Senators Mark Warner and Bob Corker. The centrist Democrat from Virginia and the Tennessee conservative have been organizing seminars on financial regulation for their colleagues and talking informally about the bill, linked by a shared background in business. Warner has been very out front on FinReg, writing a series of op-eds calling for a single, consolidated banking regulator over the summer, and his vocal advocacy probably helped Dodd's decision to support that approach even though the administration and the House have thus far supported less ambitious plans. But one serious worry is that Warner is a bit tepid on the idea of a Consumer Financial Protection Agency, the critical institution that would help prevent the kind of nonsense mortgages that catalyzed the housing bubble as well as more prosaic rip-offs like outrageous bank fees. While Warner may be assuaged by the changes House Financial Services Committee Chair Barney Frank made to the bill in September, there is worry that his alliance with Corker, an opponent of the CFPA, could create a bipartisan block. On the other hand, this is promising because it confirms that there is real bipartisan momentum behind getting financial regulatory reform done. The key will be making sure that this isn't a bipartisan hoodwinking where members of both parties supported by business interests make a series of cosmetic changes while letting real issues go by the wayside -- concerns about shadow markets and the mechanics of derivatives regulation, for instance. Time will tell, but the momentum on this committee bears watching.
--Tim Fernholz
