Johnson quietly builds legacy with Banking Committee

• Presiding over the Banking Committee

Senate Banking Committee Chairman Sen. Tim Johnson, D-S.D., looks on as Federal Reserve Board Chairman Ben Bernanke answers questions following a semiannual report to the committee July 17 on Capitol Hill in Washington. (AP photo)

Talk about it

With his trademark low-key style, South Dakota’s Tim Johnson has guided the Senate Banking Committee through a historic time.

In the wake of a financial crisis that rocked the global economy and as partisan dysfunction has become the hallmark of Congress, Banking Committee bills have become law.

Since Democrats gained a majority in the Senate in the 2010 election, Johnson has helmed the committee — officially the U.S. Senate Committee on Banking, Housing and Urban Affairs — and quietly marshaled a series of bills through Congress to the president’s desk for a signature.

“That committee, most people don’t even think about it or know it exists. But it’s one that shapes the U.S. economy,” said Don Simmons, Dakota Wesleyan University dean of leadership and public service. “Tim Johnson just may be one of the most influential U.S. senators that nobody ever heard of.”

Among the bills to pass through the Banking Committee and become law under Johnson are:

• The Export-Import Bank Reauthorization Act, signed May 30. This federally run bank guarantees that manufacturers will be paid when they ship goods to foreign countries. When American com- panies do business with other countries, they do not enjoy the recourse provided by the American court system in the event a customer fails to pay. The bill keeps the Export-Import Bank in business through 2014.

• The Iran Threat Reduction and Syria Human Rights Act, signed Aug. 10. This bill, which Johnson co-authored, is designed to put more pressure on Iran to abandon its nuclear program.

• Surface Transportation Reauthorization, signed July 6. This bill funds an array of transportation modes, from rural transit to the nation’s highways to public transportation like buses and trains.

• Flood insurance reauthorization, included as part of the Surface Transportation bill. This keeps the flood insurance program running for five years.

In other times, such a record might be unremarkable. But the partisan feuding that has reared its head during much of Congress’ routine business means any legislation faces stiff headwinds, said one of Johnson’s colleagues.

“We’ve had so many issues that used to be routine become contentious,” said Sen. Jack Reed, DR.I. “At a time when it’s very challenging, he’s been able to marshal broad bipartisan support for important legislation.”

Johnson himself cites a bipartisan approach as key.

“I’ve been able to work together in bipartisan fashion with lots of people,” Johnson said.

While he’s had success passing bills, political nominees for highlevel government jobs have brought some frustration. Chief among them has been Richard Cordray, who took the post of director of the U.S. Consumer Financial Protection Bureau in January only after President Obama gave him a recess appointment, which allows him to do the job without the Senate’s approval.

Despite that, Cordray praises Johnson as an advocate for consumers and smaller financial operators.

“He believes it’s really important for consumers to have a voice,” Corday said. “He reminded me that it’s important to recognize that small banks and credit unions are not part of the problem.”

Cordray visited South Dakota with Johnson in April, meeting with commercial bankers and consumer advocates.

Rhode Island’s Reed, who serves on the Banking Committee, credits Johnson’s style for the committee’s success. Johnson does not grandstand or demagogue when the issues are ripe for it, Reed said.

“He has the trust and confidence of everyone on that committee. Not only is he thoughtful but innately fair,” Reed said. “He gives everyone an opportunity to express themselves. He works very hard — he and his staff — to make sure everyone is listened to. That produces legislation.”

John Prible, an insurance industry lobbyist, says his group has sometimes supported Johnson and sometimes opposed him. But Johnson commands respect on Capitol Hill, he said.

“His style is not necessarily flashy, and he doesn’t go out for headlines, but he produces,” Prible said. “We truly had some issues and were a little bit fearful of him taking control of the committee. But he’s done what every good chairman is supposed to. You don’t come in with your own personal crusades and look to enact what you think is best. You look to your committee. You listen to your committee.”

For example, Johnson let two other senators — Montana’s Jon Tester and Louisiana’s David Vitter — take the lead on re-authorizing the flood insurance law, which he said included important reforms.

Norbeck parallels

Johnson’s chairmanship of the Banking Committee draws natural comparisons to the time Sen. Peter Norbeck, a South Dakota Republican, led the committee from 1932 to 1933 as America settled into the Great Depression.

Norbeck’s leadership led to hearings — dubbed the Pecora hearings after the attorney who led the questioning of witnesses — that brought Wall Street tycoons to the carpet. Americans, some of whom lost their savings as banks collapsed, followed the proceedings closely. Information revealed during testimony by National City Bank Chairman Charles Mitchell left him so disgraced that he resigned shortly afterward.

During the Depression, Congress swiftly enacted reforms including the Glass-Steagall Act that separated investment firms from commercial banking and the Federal Deposit Insurance Corp. (FDIC) that guaranteed consumers could get their money back out of their bank. All that was done before the Senate Banking Committee wrapped up its work, so its final report included no recommendations or legislation.

“Norbeck had so much influence on many of the federal banking regulations we just take for granted today, the creation of things like the FDIC. People just put their money in the bank knowing it’s federally insured,” DWU’s Simmons said. “We had parallel national crises. And again, it’s the South Dakota senator who steps up and helps keep the ship afloat during a national economic crisis.”

While Johnson has called the likes of JPMorgan’s Jamie Dimon and MF Global CEO Jon Corzine to testify about potentially dubious Wall Street practices, those hearings haven’t commanded the nation’s attention for long. And the nation hasn’t seen the watershed reforms of the 1930s.

The Glass-Steagall Act was repealed at the end of President Bill Clinton’s tenure. Some claim this led directly to the 2008 financial crisis, but not Johnson.

He hasn’t pushed to reinstate Glass-Steagall, and he doesn’t plan to, he said.

“I’m not sure that a return to Glass-Steagal is the answer. It would not have prevented the recent financial crisis. Our financial system has evolved to the point where a return to Glass-Steagal would not address today’s challenges.”

Johnson said proper implementation of the Wall Street reform law, commonly called Dodd-Frank, will improve regulation of the big banks in today’s highly complex financial system. The legislation, passed during the session previous to Johnson’s chairmanship, regulates derivatives, credit default swaps, and other complex financial products that put the financial system at risk, and creates a way to unwind large financial firms without having to bail them out, Johnson said. Not all provisions of the Dodd-Frank law have been fully implemented, Johnson notes. “We are on the way there,” he said. Johnson said he appreciates the comparison to Norbeck, who served as governor of South Dakota prior to his time in the Senate.

“I have huge respect for Sen. Peter Norbeck. As far as I’m concerned, he was among the greatest of the governors.”

‘Influence and leadership’

Despite a lack of ground-breaking reforms, the bills the Senate Banking Committee has enacted have real impact.

The Export-Import Bank law matters to a fire truck manufacturer, Rosenbauer America’s South Dakota division, based in Lyons. The Export-Import Bank guarantees financing for goods shipped to other countries, which is about half of Rosenbauer’s business, said owner Harold Boer.

“If we do a deal with Panama, they would guarantee that if we deliver the trucks, Panama will pay us. It’s a cost-effective way to bid projects on the world market and be competitive,” Boer said. “Without it, it would be difficult for us to bid large projects due to the uncertainty of some governments.”

Without the Export-Import Bank, Boer said his company might take full payment upfront, or half upfront and half once the trucks reach a port to be shipped. But even that carries some risk, he said.

For Rosenbauer, the Export-Import Bank helps to keep 280 full-time employees on the job in South Dakota and, said Boer, “working overtime for the last 30 years.”

For Bonnie Spain, executive director of the Rushmore Consumer Credit Resource Center in Rapid City, Johnson’s position meant she got to tell of the struggles she’s seen military families endure. First, Spain testified before the Banking Committee in November 2011, and then she met in Rapid City with Holly Petraeus when Johnson brought her to South Dakota. Petraeus, wife of Gen. David Patraeus, heads up the Office of Servicemember Affairs at the Consumer Financial Protection Bureau.

“They met with a group of people in our community who dealt with veterans and wanted to know what we saw. That’s an opportunity we have for input that we wouldn’t have if Sen. Johnson wasn’t on the Senate Banking Committee and wasn’t the chair,” Spain said. “He has a sphere of influence and leadership now that doesn’t happen overnight.”

In addition, Spain says the consumer reforms ushered in under Dodd-Frank, such as the new law that prevents credit card companies from raising a customer’s interest rate after a single late payment, have benefitted her clients.

“If there weren’t problems in our marketplace, that law would have never have been passed. It needed to be passed,” she said, crediting Johnson for his work on the reform package.

2014 and health

With the 2012 election looming in November, some South Dakota political observers are already looking ahead to 2014 when Johnson, now 65, is up for re-election. The senator refuses to discuss 2014 until after 2012 is decided, despite Republican Mike Rounds, a former governor, taking steps toward a run.

“I don’t have an opinion on that,” Johnson said of Rounds forming an exploratory committee, one of the steps candidates must take before launching an official campaign. “The 2012 election is not over yet. It’s too early to make a decision.”

After breaking his right shoulder during a fall on Sept. 11 and his continued rehabilitation from a stroke-like brain condition he suffered in 2006, Johnson said his health issues will not be a factor in his decision about 2014.

“I did break my right shoulder, but I’m on the mend and back to work. Otherwise I’m doing great,” he said. “My shoulder is irrelevant to the issues at hand.”

The stroke-like condition is arteriovenous malformation, which caused arteries and veins in his brain to grow abnormally large, become tangled and burst. He said his therapy to deal with the effects of the condition has largely “wound down,” but the ordeal has left him with some slurred speech, and he does not have the full use of his right limbs.

He emphasized his record when asked about his health, mentioning his chairmanship of not only the Banking, Housing and Urban Affairs Committee, but also his chairmanship of an appropriations subcommittee overseeing military construction and Veterans Affairs. He’s also the second Democrat in charge of Energy and Natural Resources and Indian Affairs.

“I have my hands full,” he said.

Tags: tim johnson, news, updates, politics, state, national