Republican Sen. Richard Shelby fights for financial regulatory reform
Thursday, December 17, 2009
It is a rare moment in Washington when a lone politician finds himself at the center of a great legislative battle that he appears to be in a position to resolve. Such a moment might be coming soon for Alabama's Sen. Richard C. Shelby.
As the senior Republican on the Senate Banking Committee, Shelby is positioned to shape a new government role in the American financial system, shifting economic power that has long resided in New York to Washington in hopes of preventing another financial collapse like last year's. It's the kind of transformative accomplishment that creates a historic legacy for a senator, and Shelby -- a complex figure who spent the first three decades of his political career as a Democrat -- appears ready to take a shot at it.
"I believe that we have to have a new regulatory regime for our financial system," Shelby said in an interview in March, because the old system "failed us" in 2008. "Sweeping legislation" will be needed, he said. "I hope we can do it."
If Shelby and Sen. Christopher J. Dodd (D-Conn.), chairman of the Senate Banking Committee, can agree on that sweeping bill, Shelby said, stating the obvious, "then the chances of it becoming law are good." But are the chances of a Dodd-Shelby deal good? Their colleagues on the committee see a reasonable possibility. Sen. Mark Warner (D-Va.), a junior member of the banking committee who has grown to admire Shelby, observed that "putting his name" on a historic piece of legislation would interest the Alabamian.
Shelby could play the archetypal Southern senator in a movie. He is a square-jawed, handsome man who speaks mellifluous Alabamese. He is 75 but looks much younger, and at 6-foot-4 he usually towers over everyone around him. He carries himself regally, with the straight-backed, physical self-confidence of a star defensive end -- which he was, at Hueytown High School in Alabama's steel country.
He never moves or speaks quickly, and is a master of self-deprecation. "The most important thing about Shelby is that he lulls people into thinking that he's stupid," said his friend and former colleague Bob Kerrey, a two-term Democratic senator from Nebraska. He may look like "a big, dumb guy from Alabama," Kerrey said, "but he's smart. He's a classic trial lawyer -- he'll lay a trap for you."
"He is a prodigious reader of history, and all types of books," said an Alabama colleague who has known Shelby for years, "but at home he still plays that good ol' country boy -- 'I'm just Richard.' But he's not. He loves New York, he loves Paris, he loves to travel -- he likes all those things, but he downplays it when he's at home. He has the ability to live in both worlds." In fact, Shelby and his wife, Annette, a PhD and retired Georgetown University professor who still cuts an elegant figure at 70, made three trips to Paris just in the past year on various government-funded missions.
Shelby's politics conform to no existing model. On most issues he is predictably conservative, and he rides conservative hobby horses such as a balanced budget amendment to the Constitution (which he introduces every year) and a "flat" income tax that would impose the same low rate on everyone's income.
But he is no knee-jerk conservative. "A lot of people," he said in the March interview, "say, 'Let the market work.' You can't let the market work where the market is manipulated to such an extent that it would bring down our economy and half the world. . . . I think we're going to have to have a powerful regulatory body that approves or disapproves new [financial] products, that will put the old system in play."
Over the years, Shelby has embraced several consumer-friendly bills endorsed by progressives. He voted for Sarbanes-Oxley, the controversial 2002 law on corporate governance passed in the wake of the Enron scandal that was bitterly opposed by corporate America. He challenged Alan Greenspan's rosy view of the housing market years before the bubble burst and brought on last year's crisis. He warned of the inadequate capitalization of Fannie Mae and Freddie Mac years before they both collapsed. "He marches to his own drum," said his old friend Bill Moody, a wealthy Alabama real estate developer and political commentator who helped Shelby get elected to the Senate.
Shelby has always been -- as a Democrat, and then as a Republican -- something of a Southern populist. In his youth in Alabama he was considered rather liberal, according to friends and colleagues from that time. Nearly four decades ago he introduced the Equal Rights Amendment in the Alabama Senate, of which he was a Democratic member from 1971 to 1979. Shelby never embraced the racial politics of the George Wallace faction of Alabama Democrats, and has always enjoyed support from black voters. His friend Moody noted that in their youth in Alabama, "conservative meant racist, and that's not Richard."
"Even some of my Republican friends say I have a populist, progressive streak," Shelby said in an interview. "I am not a doctrinaire, anti-government person."