BOSTON — There may be no other issue in the U.S. Senate race in Massachusetts where the candidates’ positions are more distinct.
“You really have two candidates, one who’s backed by Wall Street, and one who Wall Street… has disdain for,” said Mark Williams, who teaches finance at Boston University.
Maybe the best place to see this contrast is in a single piece of legislation on which both Sen. Scott Brown and his Democratic challenger, Elizabeth Warren, left some big fingerprints.
Two years ago, Brown was one of three Republicans to join Democrats in a key vote that paved the way for final passage of the financial overhaul bill. The senator touted his pivotal role in passing the Dodd–Frank Wall Street Reform and Consumer Protection Act in a video to constituents.
“When some of my colleagues were saying that the bill would be bad for our economy, reduce lending and kill jobs, I kept an open mind, as I always do,” Brown says in the video. “Instead, I went to work to make it better. I spent my time working on amendments to protect our troops from financial scams and to make sure that mortgages are safer. I also worked with Congressman Barney Frank to avoid over-regulating the kinds of safe financial firms that we have in Massachusetts.”
A Closer Look At The Senate Race
WBUR explores the issues in the race between Republican Sen. Scott Brown and Democratic challenger Elizabeth Warren:
- 7/26: Can Brown Or Warren Really Create Jobs?
- 8/2: Looming Defense Cuts A Key Issue For Brown, Warren
- 8/10: Brown, Warren Offer Different Deficit-Reduction Approaches
- 8/16: Brown And Warren Both Centrists On Foreign Policy Issues
- 8/24: Brown, Warren Split On Immigration Solutions
- 9/20: How Brown, Warren Would Tackle Health Care
- 9/27: On Financial Regulations, Brown And Warren Starkly Different
- 10/29: Little Attention Paid To Climate Change In Brown-Warren Race
Complete Coverage: 2012 U.S. Senate Race
Boston University executive-in-residence and former Federal Reserve examiner Mark Williams says before lending support to Dodd-Frank, Brown asked for some notable changes.
“Almost $20 billion worth of a direct tax that would have been paid by banks to cover the Dodd-Frank act was taken away, and it was actually pushed on taxpayers,” Williams said. “So that was a huge concession that helped bankers, but really hurt taxpayers.”
Brown also won a concession that allowed banks more wiggle room to take an ownership stake in hedge funds and private equity firms. Later, after it was enacted, his staffers worked to weaken the interpretation of the law at the U.S. Treasury.
“So bankers love — and they should love — this candidate, because he’s actually delivered the goods,” Williams said. “Where Elizabeth Warren has made it very clear that bankers and their bad behavior [are] enemy No. 1.”
Consumer Financial Protection Bureau
“It was exactly two years ago today that I stepped into the Rose Garden for the first time in my life, and stood next to the president,” Warren said last week at a campaign stop, celebrating her role in the Dodd-Frank law that the Republican she wants to unseat helped make a reality.
Long frustrated by credit disclosure forms that even her students at Harvard Law School couldn’t understand, Warren proposed and pushed for an agency to protect consumers. With her testimony and lobbying on Capitol Hill, the Dodd-Frank law created what’s now the Consumer Financial Protection Bureau.
And Warren got it up and running. When Senate Republicans blocked her from leading it, she decided to run for the Senate, much to the chagrin of Wall Street bankers.
Larry McDonald, a Falmouth native who worked on Wall Street for years, hosted a fundraiser for Brown last month and says Warren used the financial crisis to advance her agenda.
“The biggest problem I think anybody in finance has with Elizabeth Warren and the two years she spent at the Consumer Financial Protection Bureau,” McDonald said, “[is] she started with things that had nothing to do with the financial crisis, and I really think that annoys people on Wall Street.”
Warren takes issue with that assertion. She points to the agency’s work to simplify and clarify mortgage applications, and its recent rulings against financial services firms.
“Just a few weeks ago, that little agency discovered that one of the biggest credit card companies in the United State had been cheating its customers. It called them out for it, made them refund every penny they had taken, plus interest,” Warren said. “And then made them pay hundreds of millions of dollars in fines. You know, that’s [a] pretty good start for an agency like that.”
Wall Street has been backing Warren’s opponent in this Senate race. Finance professionals have given millions of dollars to Brown’s campaign. McDonald says they don’t like Warren’s hard-line stance, and they like that Brown has worked with them before.
“We need more people from the street helping the regulators — the academics and the bureaucrats — and I believe that people like Scott Brown want to do a more efficient job in financial reform,” McDonald said.
One example of deregulation that Brown likes to give is a new crowdfunding law he helped push through Congress that lets more people invest in startup companies.
“This is something that is a great opportunity to think outside the box and modernize and provide opportunities for investment and job creation,” Brown said of the law.
Massachusetts voters will have a big say in defining the next round of federal regulation of financial markets. Dodd-Frank is not a done deal. BU’s Mark Williams says many of the rules outlined in it still have to be implemented and funded.
“On the one hand you have Scott Brown who is focusing specifically on free enterprise and deregulation of the financial markets,” Williams explained. “And on the other you have the creator of the Consumer Financial Protection Bureau focused specifically on giving a tight leash on the banks in the financial industry that actually helped create the worst recession since the Great Depression. The difference can’t be any more stark than this.”
Is government suffocating economic growth by tying down the financial industry? Or does it need to keep a closer eye to make sure there’s not another financial crisis?
That choice is something Massachusetts voters have the power to make.