Senate Minority Leader Chuck Schumer made clear almost two weeks ago that he would vote against a bill that eases some of the Dodd-Frank regulations put in place after the 2008 financial crisis. He also made clear he wouldn’t try to stop it.
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As more than a dozen Democratic senators helped Republicans chip away at the Obama-era banking law Wednesday, Schumer largely stepped aside, rather than twist arms. It was a do-what-you-must strategy aimed at allowing some moderate Democratic senators to avoid the wrath of powerful banking interests back home. But it also split the party and, some argued, muddied the party’s populist message against President Donald Trump ahead of the midterm election.
For Schumer it was a crucial test of how he intends to shepherd a deeply divided group of Democrats through a difficult campaign year, and beyond. While some of his predecessors might have blocked the vote or tried to hold troops in line, Schumer, a New Yorker unafraid of noisy disagreements, was comfortable with some fights within the family.
“When half of our caucus sides with Republicans and the banks, it’s impossible to rise above the din and show that we’re on the side of the working class,” said Brian Fallon, a former top Schumer aide who later advised Hillary Clinton’s presidential campaign.
“You can’t blame leader Schumer for not wanting to twist the arms of red-state Democrats against home-state banking interests,” Fallon said, “but from the standpoint of the larger party messaging, it’s a missed opportunity to not strike a bright-line contrast on behalf of consumers.”
The Senate approved the bill Wednesday 67-31.
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Schumer put the party on this path last fall when he agreed to allow four Democratic senators — almost all of them up for re-election in states Trump won — to work with Senate Banking Committee Republicans on legislation to ease regulations imposed after the 2008 financial crisis.
Initial talks between Sen. Mike Crapo, R-Idaho, the panel’s chairman, and its top Democrat, Sen. Sherrod Brown of Ohio, broke down as Democrats said the changes went too far. But within a month of gaining Schumer’s nod, the Democratic senators — Jon Tester of Montana, Heidi Heitkamp of North Dakota, Joe Donnelly of Indiana and Mark Warner of Virginia — struck a deal with Republicans. Their compromise sailed through the committee.
Moderates say the changes they have been seeking for years are needed to help small and mid-size banks, particularly in rural regions, that can’t afford to keep up with the regulations. But liberals argue it goes too far in lifting requirements on bigger banks that received federal bailout funds.
Seizing the opening for a legislative victory — and a bipartisan bill that divides Democrats — Senate Majority Leader Mitch McConnell moved it swiftly to the floor. Schumer, GOP aides said, was getting rolled.
The left flank hammered Democrats for cozying up to bankers — Massachusetts Sen. Elizabeth Warren named names of fellow Democratic senators in an email blast. But even if the Warren wing tried to filibuster, the GOP majority — with the support of Democrats — had more than the 60 votes needed to overcome a blockade.
About the only option left was the war of words. And it has been explosive.
“This bill wouldn’t be on the path to becoming law without the support of these Democrats,” Warren chided colleagues in a tweet.
“Calling out members of my own party who are supporting the #BankLobbyistAct doesn’t make me the most popular kid on the team. But that’s not why I ran for the Senate,” she said in another.
Heitkamp shot back Monday that she didn’t come to the Senate to “worry about whether we were keeping the caucus together.”
“I came here to represent North Dakota, and that’s exactly what I’m doing,” she told The Associated Press, adding that her local bankers say they’ll be able to do more lending if the bill is passed. “It really will make a huge difference for rural America.”
Schumer has mostly stood by as tensions flared. At a recent closed-door luncheon, moderate senators — they were taken aback by the directness of the attacks — told Warren she needs to stop.
Schumer did tell Warren to focus her opposition on the substance of the bill, rather than its supporters, according to a person familiar with the exchange. Warren responded that working on these issues was why she ran for the Senate, according to another person familiar with the conversation. Both people requested anonymity because they were not authorized to discuss the private conversation publicly.
But Schumer has largely let the caucus handle those disagreements among themselves, according to a Democratic aide familiar with the issues who was not authorized to discuss the private session publicly and requested anonymity. Senators, the aide said, don’t want him to micro-manage.
Schumer rose to become party leader after helping Democrats win tough elections in states now dominated by Trump voters when he was chairman of the Democratic Senatorial Campaign Committee more than a decade ago. At the time, Wall Street money flowed to Democrats as well as Republicans.
Part of his appeal in taking over for retiring Sen. Harry Reid, D-Nev., after the 2016 election was a promise to stitch together the party’s liberal and conservative wings, bringing Warren and moderate Democrats into caucus leadership positions.
Schumer has kept them together more than many expected, especially as 10 Democratic senators run for re-election from Trump-won states. Senate Democrats held the line against GOP efforts to repeal the Affordable Care Act and put up a fight against the president’s nominees. All voted against the GOP tax plan.
Where Reid might have halted the banking bill by pushing more Democrats to oppose it — a strategy that often prevented infighting but left some senators frustrated with inaction — Schumer decided to let the process play out.
The outcome this week, though messy, could allow all sides to claim wins. Liberals take a populist stand that revs up the base and moderates strike a bipartisan compromise for their home-states.
“He’s dealing with this little internecine war as good as could be expected,” said Jim Manley, a former top Reid aide. “That’s an integral part of the playbook. Sometimes a good leader knows there are different ways for members to claim victory.”
