The financial-reform bill has been a good test case for what happens when Congress introduces transparency into a clash that pits the interests of the powerful against those of the public. While it will take some time to assess the legislation itself -- the Senate is expected to pass the bill after the July Fourth recess -- we can consider how effective efforts to bring openness to the legislative process have been in terms of both scoring political points and delivering sound public policy. This is an especially important test because the legislation will only reach its full potential if reformers focus their attention on federal regulators who will enforce the law.
What separated this process from other legislative efforts? Democrats in Congress sought political gain in painting Republicans who opposed the bill as tools of Wall Street. Democrats ensured a relatively lengthy and open amendment process on the Senate floor and a House-Senate conference committee process open to the press. The majority party hoped the open process would highlight Republicans' opposition to reform while alleviating pressure from reform groups who worried backroom deals would water down the bill.
While these steps put legislators' positions on the record, the actual conference proceedings consisted of talking-point recitals as staff and members worked behind the scenes to craft deals that were presented in nearly all cases as faits accomplis to the committee. Similarly, the open amendment process did allow reformers to improve the bill, but the decisions about which amendments came to the floor were made behind closed doors.
That doesn't mean transparency failed -- no negotiation can ever be fully public -- but information is nothing without advocacy. If efforts at openness are after-the-fact revelations lacking context, motivation, and time to respond, the public isn't getting the full measure of its government.
"Transparency helps, but you still need access; the advocates that were working the issue could not rely on everything being done in the light of day," says Ed Mierzwinski, who lobbied for reform on behalf of the U.S. Public Interest Research Group. "We did win quite a few improvements to the bill, and that could have been because of the pressure that we were putting on throughout the last couple of weeks. Would we have gotten those saves if it hadn't been in public? It's hard to say."
The recent controversy over Sen. Scott Brown's support of the bill shows how knowledge doesn't always lead to reform. During conference, legislators agreed to Brown's request for a loophole in the rule that bars banks from owning hedge funds. The exception was a gift to Massachusetts-based financial institutions. However, as the conference concluded at 5 in the morning, legislators added in a $19 billion tax on the banks to cover the cost of the bill. Brown refused to support such a tax, despite activist pressure, and threatened to withdraw his critical vote, casting doubt on the support of moderate Republicans (and Democrats) who would likely join him. After private negotiations, conference was reopened for the specific purpose of removing the tax, producing a weaker bill -- but one intended to pass.
This narrative wasn't reported thanks to the open conference; instead, reporters outlined the story with the usual mix of fundraising numbers, anonymous sources, and members angry at Brown's special treatment, especially progressives who would have rather seen Democrats go after their votes. Ultimately, the transparency of the amendments process and conference served the Democrats' interests as much as those of the public, allowing them to benefit from the very real efforts of Republicans to protect the banks, while disguising the influences that led them to allow votes for some reforms but not others.
To scrutinize the Democrats, outside observers had to rely on efforts from groups like the Sunlight Foundation, a nonprofit dedicated to government accountability. The group used streaming-video technology to provide live commentary and context on the conference committee, fact-checking and providing information about members' connections to the financial sector. The organization also kept tabs on how the conferees raised money during the process, catching a number of Democrats taking money from the financial sector even as the process moved forward.
Organizers leveraged that information to pressure individual members. Chris Bowers, who worked for financial reform at his blog, Open Left, and consulted with Americans for Financial Reform, a coalition that supports financial reform, used the information to alert Rep. Carolyn Maloney's constituents that she was raising money from credit-card companies just before a major vote to limit those companies' ability to charge businesses excessive fees.
"[Sunlight's efforts] certainly helped a lot in this case. [We] wouldn't have been able to prove it otherwise," Bowers told me in an e-mail. "At least on this issue, it puts members of Congress who would normally be sympathetic to Wall Street on the defensive and helps reform."
However, the process often moved too quickly for reformers to take advantage of this data. It was hard for reporters to keep track of what was in the bill and what wasn't as offers, amendments, and counteroffers bounced around the room, much less for reformers to leverage that knowledge. Indeed, the problem often became one of attention span -- even as the conference committee proceeded, major news events like hearings on the Gulf of Mexico oil spill distracted the media. There was a delicate balance for reformers, who wanted to see a vote on the bill before campaign season and short-circuit Republican obstruction but who also feared that a fast-moving process would allow too many hidden loopholes into the bill.
