Sen. Kaufman of Delaware tests the big-bank theory
When Congress excluded the public option from its landmark health-care bill, the leading voices in opposition from the left were familiar figures such as Howard Dean, liberal bloggers and members of the Congressional Progressive Caucus.
On the other hand, Sen. Ted Kaufman (D-Del.) was virtually unknown until a few months ago. But the debate on financial regulatory reform has turned Kaufman, an appointed senator, into a liberal hero as he seeks to break up the largest banks in the country. Under his proposal, no bank could hold more than 10 percent of the nation's total deposits, and banks could have liabilities up to only 2 percent of the nation's gross domestic product. Such provisions, he says, would force banks such as Bank of America to shrink.
Obama administration officials and top Democrats on Capitol Hill have not directly criticized Kaufman's idea. But they say the current version would empower regulators to monitor the size of banks and their risks to the overall economy and break up banks if necessary.
And Obama economic adviser Lawrence H. Summers said on PBS last week, "Most observers who study this believe that to try to break banks up into a lot of little pieces would hurt our ability to try to serve large companies, and hurt the competitiveness of the United States."
Kaufman said regulators have not used that power and will not do so in the future. His plan, he added, is the best way to prevent bailouts of big banks.
"What do we have to do before someone sends the message that these things are too big and that this Congress cannot pass the buck to the regulators who didn't do the job in the past?" he said. "What are we doing now as senators on the floor, passing legislation based on the fact 'I trust my regulators now'? Why aren't we passing legislation that will work over the next two or three generations?"
Kaufman, who served as a Senate aide to Joseph R. Biden for more than 20 years, has hammered the issue in speeches for weeks. As the debate on regulatory reform dominates congressional discussion, four other Democratic senators have joined his cause.
He is also, at least among liberal activists, no longer anonymous. Arianna Huffington has raved of Kaufman: "What conditions helped turn him into a fearless crusader? And how do we get more like him?"
Kaufman is an unusual kind of senator, part of a small club that once included three but is down to two. Paul G. Kirk Jr. was a longtime aide to Sen. Edward M. Kennedy (D-Mass.) and served in his old boss's seat briefly until Republican Scott Brown was elected. George S. LeMieux, a former chief of staff to Florida Gov. Charlie Crist, remains in the Senate as the replacement to Republican Mel Martinez.
Kaufman was surprised when Biden, days after being elected vice president, proposed that his former aide should replace him; Kaufman had never held public office. Gov. Ruth Ann Minner (D) made it official by appointing him.
Kaufman immediately said he would not seek a full term, and it was widely assumed he was a caretaker of the seat for Beau Biden, the vice president's son and Delaware's attorney general. But Biden opted against a run for the seat in November. Rep. Michael N. Castle (R-Del.) is now the front-runner, but Kaufman, 71, still has no plans to run.
"I've never been elected to anything, I was never the class president, not even in third grade," he said. But he added: "It's much easier than I thought it would be. When I taught my courses [at Duke University], I would tell students, 'I would never want to be a senator; that's not what I want to do, and staff is really important.' Now the one message I give to chiefs of staff is 'You could be a senator, too.' "
Kaufman, with no need for fundraising or raising his profile, has largely toed the party line on key issues. Before regulatory reform, he was perhaps best known in the Senate for giving a speech every week in praise of a federal employee, reflecting his view of the importance of the much-maligned "Washington bureaucrats."
At the same time, the graduate of the University of Pennsylvania's Wharton business school had long been interested in financial issues, and he saw an opening in February and March as much of the Senate remained focused on health care.
His strong rhetoric and the obvious populist appeal of his stand may not carry the day, however. No Republican has formally endorsed his proposal. And if the two parties reach a compromise on the legislation, Kaufman's provision may not even come up for a vote: Some Democrats and Republicans who oppose his provision may not want to want to go on record opposing a provision to shrink big banks, an idea likely to be popular with the public.
Kaufman, while eager to make his case publicly, has been unwilling to use his ultimate trump card: his long-standing relationship with Biden. He says the two speak regularly, but Kaufman has not asked Biden to back his bank proposal, nor will Kaufman blast the administration in his speeches.
"I am a senator; I think this is what a senator does," he said, referring to giving speeches and offering amendments. Referring to Biden, he added: "He is one of my best friends, but he's never called me [since Kaufman entered the Senate] and said, 'I really want you to do this.' And I never call him up."