Key lieutenants behind scenes ensured passage of financial regulation overhaul
Friday, July 23, 2010
When Neal Wolin walked into the House speaker's office in December, landmark legislation to reshape the nation's financial regulations had been working its way through the House for more than six months. Top Obama administration officials had been confident the bill would ultimately pass the chamber, but a late challenge had emerged from centrist Democrats concerned about a provision that would give individual states more power to enforce consumer protection laws.
For decades, the question of how much of this authority the federal government should share with states has been a hot-button issue. And now a compromise solution was in trouble. With lawmakers preparing within days to head home for the holidays, House Majority Leader Steny H. Hoyer (D-Md.) and White House Chief of Staff Rahm Emanuel tasked Wolin, the second in command at the Treasury Department, with removing the obstruction to the bill's passage.
"Nerves were frayed, and everyone wanted to get this done," said Kim Wallace, head of legislative affairs at Treasury, who sat in on the last-minute talks.
The key players
This scenario played out repeatedly as the administration pushed for the new regulations. Behind President Obama's victory, crowned with his signing of the bill Wednesday, were a few key but little-known lieutenants who helped develop the strategy, waged a public relations campaign to fight off critics and negotiated last-minute deals to secure the bill's passage.
Key players include such people as Wolin and a team led by Michael Barr, the assistant Treasury secretary for financial institutions, along with Diana Farrell, the deputy director of the National Economic Council, who often weighed in with the White House perspective.
To resolve the impasse over state enforcement powers, Wolin negotiated with Rep. Melissa Bean (Ill.), the leader of the centrist caucus called the New Democrats, and others. The talks dragged on for hours. Hoyer shuttled between that meeting and an office nearby where House Speaker Nancy Pelosi (D-Calif.) and Rep. Barney Frank (D-Mass.), chairman of the Financial Services Committee, were waiting for a solution. But after several hours of bargaining, no deal had been struck.
Hoyer then asked that Wolin and Bean be left alone.
About an hour later, the pair had found a middle ground, limiting the new enforcement authority states would get. The bill was able to pass the House soon after.
Wolin "does understand Washington better than anybody," said Treasury Secretary Timothy F. Geithner. "He understands how to make things work where the rubber hits the road."
Geithner and Lawrence H. Summers, Obama's top economic counselor, brought Wolin, Barr and Farrell together. They are an Ivy League trio known for their wonky discussions of the details of complicated legislation. Wolin and Barr both worked at the Treasury Department during the Clinton administration, while Farrell had been head of the McKinsey Global Institute, the economics research department of the consulting firm McKinsey & Co.
"They share information. There is no insecurity or competition between them. They respect each other," a senior administration official said.
The three spent hundreds of hours working with senior staff for Frank and Sen. Christopher J. Dodd (D-Conn.), chairman of the Senate banking committee, who were responsible for shepherding the bill in their respective chambers. But the trio sometimes were reluctant to make necessary compromises and had to be prodded by legislative allies to do so, congressional aides and industry lobbyists said. "You had to dial back policy to get the politics right. That is part of the normal process," said one congressional staffer.