Johnson piloting Senate Banking Committee through high watersSen. Tim Johnson has built a political career on being low-key, even mild-mannered. Now, as chairman of the U.S. Senate’s Banking, Housing and Urban Affairs Committee since the start of 2011, the Vermillion native’s roll-up-your-sleeves style is being put to the test. The three-term Democratic senator leads a committee that has an agenda including implementation of the 2010 financial reform law known as Dodd-Frank, reform of the Fannie Mae and Freddie Mac mortgage entities and continued oversight of the Troubled Asset Relief Program (TARP) — the bank bail-out bill passed at the end of the President George W. Bush administration.
By: Denise Ross, The Daily Republic
Sen. Tim Johnson has built a political career on being low-key, even mild-mannered.
Now, as chairman of the U.S. Senate’s Banking, Housing and Urban Affairs Committee since the start of 2011, the Vermillion native’s roll-up-your-sleeves style is being put to the test.
The three-term Democratic senator leads a committee that has an agenda including implementation of the 2010 financial reform law known as Dodd-Frank, reform of the Fannie Mae and Freddie Mac mortgage entities and continued oversight of the Troubled Asset Relief Program (TARP) — the bank bail-out bill passed at the end of the President George W. Bush administration.
And those are just the highlights.
With Republicans working as hard to scuttle the Dodd-Frank financial reform law as they are to repeal President Obama’s other major legislative victory — health insurance reform — Johnson stands as one of his party’s bulwarks against such efforts.
“There will be hearing after hearing on Wall Street reform,” Johnson said. “We’ve held more than 25 hearings so far.”
A bulk of the work on Dodd-Frank, Johnson explains, comes because his committee is charged with writing the administrative rules that will guide federal regulators as they implement and enforce the Dodd-Frank Wall Street Reform and Consumer Protection Act.
“Many of those rules are not complete yet,” he said.
Johnson notes that the way rules get written is often as much of a partisan tug-of-war as the passing of legislation itself.
“There’s more than one way to write a rule,” Johnson said. “I will work to assure that the purpose of Congress is carried out.”
Dodd-Frank was passed when Democrats controlled both the House and Senate, and Republicans took control of the House in the 2010 election.
South Dakota’s junior senator, Republican John Thune, is at odds with Johnson on the value Dodd-Frank would deliver to the country.
“The Dodd-Frank legislation requires over 250 new regulations for implementation — effectively a way for Congress to ask agencies to sort out the details,” Thune said. “Anytime you are talking about hundreds of new regulations, we are probably dealing with federal overreach.”
Thune praises former rival
Even though they don’t agree on all of the issues at hand, Thune said he believes Johnson will be a good steward of the committee and its work.
“South Dakota has a strong banking sector and I think Senator Johnson understands the numerous issues facing our banks and credit unions in the state,” said Thune, who is not on the Banking Committee.
“He’ll have some tough challenges dealing with housing policies and Freddie Mac and Fannie Mae, all of which fall under the jurisdiction of the Banking Committee,” he said.
Perhaps the Banking Committee’s thorniest task comes with the reform of Fannie and Freddie, which are labeled government-sponsored enterprises (GSEs). So far, the Senate Banking Committee has held 14 hearings on the matter.
On that score, the partisan rancor is not on full display, Johnson said.
“Sen. Shelby (Republican Richard Shelby of Alabama) and I have agreed that we should take our time with this bill and not charge ahead, as the House has done,” he said. “We need to avoid roiling the real estate market.”
House Republicans have said they want to limit the amount of federal money used to back Fannie and Freddie, which operated as private entities with government guarantees as a safety net until they were placed into “conservatorship” when the financial crisis hit in 2008. Some argue to eliminate the agencies, arguing they played a major role in creating the financial crisis.
“The House wants to eliminate the GSEs. Homeowners and Realtors and every other responsible body sees a role for the federal government — a smaller role, but a role,” Johnson said.
If Congress gets GSE reform wrong, Johnson said, it could mean that the 30-year fixed-rate mortgage could fade into history. As it is, only home-buyers in the United States and Denmark enjoy 30-year mortgages.
“I’m fearful that the 30-year fixed-rate mortgage may disappear if the House Republicans have their way,” Johnson said. “There would be no federal backstop.”
Johnson criticizes ‘vocal minority’
Johnson also is openly irritated that a string of nominees to key posts are being held up by the GOP. At the top of his list is the head of the newly created Consumer Financial Protection Bureau, created in the wake of the financial crisis as a watchdog on banking practices.
Republican opposition to well-known consumer advocate Elizabeth Warren was so fierce that President Obama opted to bypass her and nominate former Ohio Attorney General Richard Cordray. Republicans gave him no warmer of a reception.
Ahead of Cordray’s failed confirmation hearing on Sept. 6, Johnson’s remarks were deemed newsworthy enough on Capitol Hill that Politico obtained a copy of them before the hearing and reported them as a scoop under the headline “Tim Johnson to rip GOP over Richard Cordray.”
“A vocal minority is playing games with the process,” Johnson said at Cordray’s hearing. “This political gamesmanship is preventing Americans from receiving the consumer protections they deserve.”
He reiterated his feelings during a recent interview.
“Until they allow our director to be finalized, there is no even playing field,” Johnson told The Daily Republic.
Again, Thune holds a different view, saying that the consumer protection bureau should not be as independent of congressional control as originally design.
“You will see efforts to bring some accountability to the Consumer Financial Protection Bureau which enjoys taxpayer funding without any real oversight,” Thune said.
When asked how Johnson might wield his chairmanship to get the consumer protection agency off the ground, he said there’s “nothing much” he can do.
“I don’t see much of anything that can take place,” he said. “Republicans in the Senate have sworn to oppose the consumer bureau unless there are major changes.”
The Senate Banking Committee’s next meeting is set for Tuesday to discuss consumer protection and protecting the middle class.