Lost amidst the Trump shutdown and a steady pace of presidential candidates announcing 2020 runs was an underappreciated story in American politics: many of the most progressive and dynamic freshman Democrats in Congress, including Reps. Alexandria Ocasio-Cortez, Ayanna Pressley, Rashida Tlaib, and Elizabeth Warren protege Katie Porter, were named to the new majority on the House Financial Services Committee. This has significant implications for arguably the most influential sector in Washington: the financial industry.
What former Rep. Brad Miller described as “kind of a backwater committee” when he arrived in Washington in 2003 quickly became the epicenter for political action in Washington after the 2008 financial crisis. House Speaker Nancy Pelosi responded to this by stacking the committee with vulnerable members from her party, going against the objections of then-Financial Services Chair Barney Frank. As Robert Kaiser describes in “An Act of Congress,” his book about the drafting of Dodd-Frank, the committee’s status as a fundraising perch was a key reason why:
“There were [forty-nine Democrats on the committee, and twenty-nine Republicans.] Frank had tried to persuade Pelosi to shrink the unwieldy Financial Services Committee in 2009. At first she agreed, but then decided she couldn’t. She wanted to put more members of the classes of ‘06 and ‘08 on Financial Services, known as a “money committee,” from which it was easier to raise campaign contributions. (The financial interests that cared about its work had a lot of money to donate.) So for political reasons, the committee did not shrink, but grew. More than 15 percent of the House of Representatives were members of Frank’s committee.”
Kaiser goes on to describe how this led to low attendance on the massive committee. In short, Financial Services members exploited their committee membership for all it was worth during donor call time, but rarely showed up to committee hearings or markups. Kaiser further outlines how Wall Street used its influence with committee members to water down Dodd-Frank. The most well-known example of this occurred when a host of junior Democrats on the Financial Services Committees’ bottom two rows teamed with Republicans to block the CFPB from having the power to regulate auto dealers. As Ryan Grim and Arthur Delaney reported in 2009, the bottom two rows of the Financial Services Committee became “the place where reform goes to die,” with members skipping most committee proceedings in favor of fundraising, then showing up for votes to thwart enhanced consumer protections.
After Ocasio-Cortez and other progressive champions were named to the committee, Politico framed the freshman members’ presence as a challenge for new committee chair Maxine Waters. But having spent her years in the minority contending with Democratic committee members willing to defect even on big-ticket items like last year’s S. 2155 (derided by Elizabeth Warren as the “Bank Lobbyist Act”), Waters probably welcomes the challenge. In her inaugural remarks as chair, Waters went beyond highlighting the diversity and dynamism of the new members. She explicitly signaled an end to the committee’s status as a Wall Street cash magnet. “This was known as a juice committee,” Waters declared. “There is no more juice in this committee.”
Indeed, Rep. Ocasio-Cortez’s chief of staff took to Twitter to declare that he’d made his boss’ reliance on grassroots donors rather than Wall Street interests a key selling point in seeking committee spots. Rather than dedicating all her hours to call time, Ocasio-Cortez pledged to show up to committee meetings and do the real work of legislation. In other words, a 180-degree reversal from the dynamic that prevented Chair Frank from making landmark financial regulation as effective as he might have preferred during the 2009-2010 session.
While the committee will likely focus on oversight for the next two years, this new regime could clear the way for more transformative changes down the road.