POLITICO
Collin Peterson, 1; Barack Obama, 0
http://www.politico.com/news/stories/0609/23874.html
By: Eamon Javers and Victoria McGrane
June 18, 2009 03:31 AM EST
As President Barack Obama began to craft his
massive Wall Street regulatory reform proposal
this year, he ran smack into opposition from an
unlikely Democratic source: guitar-playing,
cigar-chomping Rep. Collin Peterson, who
represents the nation’s No. 1 sugar beet farming
district in Minnesota.
What’s even stranger is that Peterson, the
chairman of the House Agriculture Committee, won
the financial fight and blocked a proposal that
would have destroyed a regulatory agency he
favors.
And with the release of Obama’s scaled-back
proposal Wednesday, Peterson says happily, the
administration seems to be “pretty much back in
line.”
The behind-the-scenes battle reflected the
strange power that agricultural-state lawmakers
had over the crafting of the sweeping Wall Street
reforms. It took place along a long-standing
Washington fault line: congressional prerogative
vs. executive fiat.
At issue was the administration’s proposal to
merge the Commodity Futures Trading Commission
and the Securities and Exchange Commission. The
idea wasn’t merely to do away with one set of
impenetrable Washington acronyms but, rather, to
merge the oversight of securities, like stocks
and bonds, and futures, which are contracts to
buy specific items in the future - hence the name.
Futures have long been associated with the
nation’s agrarian past, because farmers buy and
sell contracts for specific commodities like
corn, wheat or the sugar beets grown in
Peterson’s district in Minnesota.
And even though futures today are just as likely
to be currency or oil contracts as pork bellies,
they’re still regulated by the CFTC and overseen
on Capitol Hill by the Agriculture committees in
the House and Senate.
If Obama’s plan went through, the Agriculture
chairmen would lose their reach into the global
financial industry.
Enter Peterson. A conservative Democrat and
former accountant, the 10-term congressman has
been a staunch defender of agriculture interests
in a House caucus dominated by party liberals.
And this time, he took his case straight to
Treasury Secretary Timothy Geithner.
Peterson and House Financial Services Committee
Chairman Barney Frank (D-Mass.) joined with other
members of Congress on June 3 for a 7 p.m. dinner
at the Treasury Department. Peterson said
Geithner made another push for the merger.
“We made it pretty clear that we did not think it
was a good idea,” Peterson said. “Barney just
said, ‘Don’t do it.’ So, apparently, they
listened.”
“In a perfect world, I think they would have
liked to do this, but it’s not necessary,”
Peterson said of the Obama administration. “Why
pick fights that are not necessary?”
One of the reasons it would have been such an
enormous fight, say cynics, is the proposal would
mean farm-state members would lose the campaign
contributions that come with their financial
oversight authority.
After all, farmers are not the biggest campaign
contributors to members of the House and Senate
Agriculture committees. Financiers are.
In the 2008 election cycle, reports
OpenSecrets.org, financial, insurance and real
estate interests gave more than $28 million to
members of the Senate Agriculture Committee in
political action committee and individual
contributions. Agribusiness interests were
completely overshadowed, giving slightly more
than $10.6 million.
For Peterson personally, the margins were
reversed, with $542,000 coming from agribusiness
and $112,000 coming from the financial sector in
the 2008 election cycle, OpenSecrets.org said.
It was a similar picture in the House, where
finance, insurance and real estate PACs and
individuals gave more than $8 million to members
of the Agriculture Committee, while the
agribusiness industry could muster only $7
million in contributions.
But members of Congress who resisted the merger
say their gripe wasn’t about authority or
contributions but because there’s no need to
merge agencies in the midst of a crisis.
Asked why it’s a bad idea, Peterson - who has
said campaign contributions played no role in his
position on the issue - cites a previous effort
to reshape the bureaucracy in the midst of a
crisis that ended up with decidedly mixed results.
“I would have two words: Homeland Security,”
Peterson said with a laugh. “In the middle of a
crisis, you shouldn’t shake everything up for no
good reason.” More important than moving boxes on
an org chart, he said, is that the CFTC and the
SEC both adopt similar tough approaches to
regulation. “I think Barney and I were able to
convince the administration that that’s where we
should go.”
But the resistance didn’t come solely from the
House side. Asked the same question, Frank said
simply, “No sensible person would think they had
the votes to do that in the Senate.”
Still, supporters of the plan kept up the heat on
their side. On June 11, Sen. Chuck Schumer
(D-N.Y.) sent a letter to Geithner intended in
part to buck up his resolve to merge the CFTC and
the SEC. “The opportunity we have now to overhaul
our alphabet soup of regulators is once in a
lifetime and must be matched by
once-in-a-lifetime efforts by the administration
and Congress,” Schumer wrote.
But it was too late. A few days later, the
details of the administration’s plans began to
leak out to the media. The CFTC would stay in
place.
Asked by Bloomberg Television’s Al Hunt whether
competing interests stifled consolidation of
regulatory agencies, Obama said Tuesday that he’s
always intended to build off of the existing
foundation, rather than starting with a blank
sheet of paper.
“It didn’t make sense for us to create a whole
new SEC when the SEC already has some top-notch
professionals who do what they do very well,” the
president said.
And on the same day, when asked about
congressional turf fights by CNBC’s John Harwood,
the president was philosophical about what’s
doable in Washington.
“Did, you know, any considerations of sort of
politics play into it?” the president asked
rhetorically. “We want to get this thing passed,
and, you know, we think that speed is important.
We want to do it right. We want to do it
carefully. But we don’t want to tilt at
windmills.”
Obama’s willingness to bow to political reality
suggests that he wants to avoid making enemies of
legislators he’s going to need in coming years.
“It’s a good example of the kind of mistake that
was avoided because of his Capitol Hill
background,” says a financial industry lobbyist.
“A former governor would have taken the executive
approach of thinking the issue could easily be
decided through logic, persuasion and fiat.”
© 2009 Capitol News Company, LLC
