In typical debate prep, candidates try to game out what questions might come from moderators, and what attacks might come from rivals, to have responses at the ready.
But there are always moments that are impossible to anticipate. It’s unlikely, for instance, that anyone on Sen. Elizabeth Warren’s prep team had considered the scenario that arose Tuesday night: What if former Vice President Joe Biden angrily takes credit for your signature achievement?
After Biden said on stage that he was the only one who had gotten big things done, Warren noted that she had ushered into being the Consumer Financial Protection Bureau, over the objections of Wall Street and many in her own party.
Biden objected. “I agreed with the great job she did, and I went on the floor and got you votes,” he said, his voice raised, pointing at Warren. “I got votes for that bill. I convinced people to vote for it. So let’s get those things straight too.”
When Warren was asked to respond, a look of anger washed over her face. She paused, and said, very deliberately, “I am deeply grateful to President Obama, who fought so hard to make sure that agency was passed into law, and I am deeply grateful to every single person who fought for it and who helped pass it into law.”
Biden, however, was not one of those people, according to numerous sources who were involved in the fight over the CFPB’s creation. He did, however, offer Warren a verbal pat on the head at the end of the exchange on Tuesday. “You did a hell of a job in your job,” he said.
“Thank you,” Warren deadpanned.
The CFPB began as an idea Warren floated in an issue of the journal “Democracy.” As it was being debated in Washington, lawmakers were confronted with the question of whether it should be a standalone product or included as a part of Wall Street reform. Warren, in an interview for the book “We’ve Got People,” said that House Financial Services Committee chair Barney Frank initially was inclined to do broader reform first, then follow it with the consumer agency.
Warren argued that the consumer piece should lead — that people needed a signal that Congress planned to keep them front of mind as the reform process unfolded. Starting with the CFPB, Warren said, would be similar to the way Franklin Delano Roosevelt had begun, by rescuing and backstopping the banks in the Great Depression, ultimately creating the FDIC, which ended bank runs. Because of that, FDR gained the political capital needed for bigger structural reforms. Ultimately, CFPB became part of the broad Dodd-Frank effort, and was signed into law in the summer of 2010.
According to former White House officials Jared Bernstein and Austan Goolsbee, Biden was supportive of including the CFPB in the broader package. And there’s no reason to doubt that in White House meetings, Biden did indeed voice support for it. Separate from CFPB, two sources also told The Intercept and the American Prospect that Biden did weigh in internally to support the Volcker rule, which intended to bar proprietary trading from banks that take deposits.
Bernstein has publicly commented that Biden “fought hard to get votes for Dodd-Frank,” presumably by talking to his colleagues in the Senate. The Biden campaign has backed this up, while also highlighting a speech he made as vice president during the Dodd-Frank debate to the Wall Street-friendly Hamilton Project, and a separate speech at the University of Wisconsin-Milwaukee.
Nobody doubts that Biden was a team player as the Obama administration sought something they could call financial reform from Congress.
Then-Senate Majority Leader Harry Reid told The Intercept and American Prospect that Biden “did help with getting votes.”
Reid said that Biden was always willing to help when Reid reached out to him to contact a senator. “I have no idea who he talked to. He was just there and said he would help me and it got done,” Reid said. “He was always available to help when I contacted him.”
But the insistence that Biden had anything whatsoever to do with rallying support for the CFPB in the Senate left many other people closely involved scratching their heads.
The insistence that Biden had anything whatsoever to do with whipping votes for the CFPB in the Senate left many people closely involved scratching their heads.
“In all honesty, that was news to me last night,” said Jim Manley, who was communications director for Reid at the time. A senator closely involved in the fight, who didn’t want to speak on the record, said that he never heard from Biden. A former Senate staffer who worked on the bill told us, about Biden’s claim, “I needed a drink when I heard that.” They added that Biden and his staff were not involved in any Hill meetings on the subject or engaged in the legislative process in any fashion.
Rep. Brad Miller, D-N.C., was the CFPB statute’s lead author in the House. Asked what Biden did to win votes for the CFPB, Miller told The Intercept and the American Prospect: “Nothing.”
He elaborated on Twitter: “I had no contact with Biden and cannot recall every hearing his name mentioned by anyone,” he said.
Former Rep. Barney Frank told us that he stayed out of Senate politics, so wasn’t aware of whether Biden whipped votes there or not. “Joe was generally supportive, his people were supportive,” Frank said. Former Sen. Chris Dodd did not respond to a request for comment. Dodd and Biden are longtime friends.
Graham Steele, at the time a staffer for top Senate Banking Committee member Sherrod Brown, referenced “Act of Congress,” the Robert Kaiser book that was a careful retelling of the entire Dodd-Frank debate, packed with interviews from dozens of insiders involved in the process, to fact-check Biden’s claim. Steele did not find Biden’s name among the list of key participants in the crafting of the bill, he said on Twitter. There were just three references to Biden in the book, the most substantial of which involves him showing up for the signing ceremony.
One major problem with Biden’s theory is that he had a key ally sitting in the Senate, who was trying consistently and also failing consistently to improve Dodd-Frank. Delaware Sen. Ted Kaufman, Biden’s replacement, was a caretaker senator who wasn’t going to run for reelection in 2010, which meant he was not beholden to Delaware’s banking interests. As such, Kaufman and his chief of staff, longtime Biden associate Jeff Connaughton, set out to overhaul the financial system in the wake of the crisis.
Kaufman’s big initiative was to partner with Sherrod Brown on a measure that would have capped the size of the nation’s largest banks. The Obama administration went on a foolhardy mission against the provision. “If enacted, Brown-Kaufman would have broken up the six biggest banks in America,” a “senior Treasury official” (almost certainly then-Treasury Secretary Timothy Geithner) told New York magazine. “If we’d been for it, it probably would have happened. But we weren’t, so it didn’t.” Geithner and Larry Summers, then director of the National Economic Council, personally lobbied members of Congress to block the Brown-Kaufman amendment; in the end, it got 30 votes.
If Biden had played any role in Dodd-Frank, one would have assumed it would have been to help his top aide, someone still in his orbit and playing a role in his campaign, get his main priority a fair shot at passage. There’s no indication that he did so, instead sitting on his hands while the Treasury Department killed it. Kaufman’s 25 years of service to the vice president did not matter when it came to banking regulation.
On the flip side, Biden did not rein in his longtime colleague from Delaware, Tom Carper, who worked with Republicans to craft a controversial amendment preserving the right of the Office of the Comptroller of the Currency to preempt state consumer protection laws on nationally chartered banks. The OCC had successfully used this tactic previously to shut down state anti-predatory lending laws during the housing bubble.
The Obama White House vowed to fight the preemption amendment, and Biden and Carper had a close working relationship for four decades. But in the end, the banking lobby won what they at the time called their No. 1 priority in all of Dodd-Frank. Carper reached a compromise that maintained preemption authority if state law “prevents or significantly interferes” with the activities of a national bank, at the discretion of the OCC chief. The amendment also banned state-led class-action suits, while allowing states to police consumer protection within their jurisdictions.
Carper defended this stripping of state consumer protection, ironically, by citing the CFPB, arguing that it should police the market with uniform standards rather than “hand over its enforcement tools to the states.” But in practice, CFPB was intended to be a floor, not a ceiling, and to work in concert with states to protect consumers. This is one of the biggest consumer weaknesses in Dodd-Frank, and it came at the hands of Biden’s close ally.
There was never a standalone vote on CFPB; it was folded into the main package and stayed in through the conference committee. Barney Frank did remember a last-minute scramble to find GOP support, when “Russ Feingold decided to be a purist and vote no, over Elizabeth’s strong objections.”
So to the extent Biden “rallied support” in the Senate, it may have been trying to persuade Maine Republicans Susan Collins and Olympia Snowe, and Massachusetts’ Scott Brown (who Warren replaced in the Senate), the only three on that side of the aisle to vote for the bill. Nobody has any recollection of him doing so, and there is no reporting from the time that he did so. Brown ultimately saved the banks $19 billion by deleting a special tax and obliterated the Volcker rule with loopholes as a condition for his vote.
If Biden wants to take credit for that, he can try.
The post Joe Biden’s Mysterious Claim That He Whipped Votes for the CFPB appeared first on The Intercept.