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It’s looking increasingly likely that Elizabeth Warren, the senator-elect from Massachusetts, will be able to secure a seat on the Senate banking committee—if that’s where she wants to go.Last week there was a movement afoot to block Warren from getting on the committee, which oversees the financial sector. But that seems to be meeting with enough resistance that at least one top Senator has publicly voiced support for seating Warren on banking.
On Friday afternoon, Senator Jack Reed—the number 2 Democrat on the banking committee—told George Zornick of The Nation that he would strongly endorse her if she sought a position on banking.
“I can’t think of anybody [who’s] come to the Senate with 30 years of detailed knowledge of the industry from the perspective of teaching at law school and doing many other things, and then serving in the drafting of significant aspects of Dodd-Frank from the administration standpoint. So she comes prepared,” he said. “It’s really an abundance of intellectual riches.”
The caveat here is that Warren may not seek a position on the banking committee. There will be pressure on her not to take the seat from Kirsten Gillibrand, the junior Senator from New York, who would be a shoe-in if not for Warren. More importantly, according to a former Hill staffer, the Democratic leadership will likely offer Warren an even more sought after committee seat—perhaps on the extremely powerful Senate Finance Committee. The point would be to offer Warren a powerful position that keeps her out of direct oversight of the financial sector.
Lobbyists for the big banks, who had succeeded in keeping Warren from becoming the head of the Consumer Financial Protection Bureau and had contributed millions to her opponent in the senate race, have been reminding senior Democrats that Warren wasn’t really entitled to a seat on the committee. Other Democratic Senators seeking a seat on the committee—two Democratic seats are vacant—had seniority. By “merits”—meaning, strictly, seniority—Gillibrand should get the seat that could go to Warren, they say.
Of course, the lobbyists weren’t really interested in Senate traditions and seniority. They just didn’t want Warren on the committee because they view her as enemy number one. She’s too smart to be bamboozled and too independent to be influenced by campaign cash or arm-twisting by party leaders. That makes her dangerous to them.
One of the things that lobbyists were saying about Warren is that she wasn’t a team player,” according to a person familiar with the matter. This meant the usual thing it means; that someone doesn’t work well with others. But it also meant something more specific: Warren isn’t necessarily loyal to “Team Blue”—Democratic elected officials, their staffs, and the lobbyists connected to them. They point to Warren’s early clashes with the Obama administration’s Treasury Department over the financial sector bailout as evidence that she cannot be counted upon.
What we’re seeing here is the activity of “The Blob,” the unofficial but ultra-powerful web of staffers, regulators and lobbyists who control so much of what goes by the name of financial oversight in Washington, DC. The term—which is used by members of the Blob themselves—was brought to the public by Jeff Connaughton, a former staff for former Senator Ted Kauffman of Delaware.
Here’s how Connaughton describes “The Blob” in his new book, “The Payoff: Why Wall Street Always Wins”:
“A king has his retinue, a celebrity his entourage, and Pig-Pen his cloud of dirt. Washington has The Blob. The Blob (it’s really called that) refers to the government entities that regulate the finance industry—like the Banking Committee, Treasury Department, and SEC—and the army of Wall street representatives and lobbyists that continuously surrounds and permeates them. The Blob moves together. Its members are in constant contact by e-mail and phone. They dine, drink, and take vacations together. Not surprisingly, they frequently intermarry. Indeed, a good way to maximise your family income in DC is to specialize in financial issues and marry someone in The Blob. … ”
The Blob has been mobilized against Warren. But it now understands that it cannot keep Warren off the banking committee with brute force. It must make her an offer she’d be crazy to refuse. If you really do catch more flies with honey, this is the ultimate honey trap for Warren.
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