Last week, Ryan Grim and Arthur Delaney wrote a story for the Huffington Post about the difficulty of getting substantive reform through the House Financial Services Committee. They focus on two main things. First, because a seat on the committee is valuable for fund-raising purposes, the Democratic House leadership seems to have stacked it with vulnerable freshman and sophomore representatives from Republican-leaning districts, meaning there are a lot of Democrats who are either personally inclined to vote with the financial services industry or feel a lot of political pressure to do so. Second, a lot of committee staffers end up switching sides to work as banking industry lobbyists, and some of them then come back to be committee staffers, raising the usual questions about the revolving door. Barney Frank comes off as something of a hero; the idea is that Frank and his senior staffers are so smart and skilled that they can get effective legislation through despite the cards being stacked against them.
There are just a couple of things I wanted to point out.
“[Former committee lawyer Howard] Menell and others claim that nobody used to bat an eye when staffers went to K Street and back. It was all part of the pro-Wall Street consensus that developed during the boom years. By contrast, the new climate is creating tensions on the committee. When the financial system collapsed last fall, the bipartisan consensus on Wall Street came down with it.”
Today, we’re seeing a partisan battle over financial regulation, especially the CFPA: progressive Democrats are for, every single Republican is against, and the battle is over the “moderate” Democrats. In a sense, this is a good thing. Because for most of the past two decades, instead we had a bipartisan consensus that what was good for Wall Street was good for America, which made it completely unremarkable that legislation was being written by people close to the industry. Remember, the landmark bills that people point to–Riegle-Neal, Gramm-Leach-Bliley, the CFMA–were products of Clinton administration and of a Republican Congress with usually smaller minorities than the Democrats have now.
“Frank laments staff compensation: ‘We underpay public officials. Particularly the staff. [Lawmakers] get a certain degree of non-monetary compensation — psychic. You know, I get mentioned on “Gossip Girl.”‘
“Staffers get a good look at how the other half lives; they rub elbows with lobbyists both at work (in meetings or even on extravagant field trips) and off the clock, during ritualistic happy hours. Those who attend know the unspoken rule: don’t talk too much shop but bring plenty of business cards. The friendly social scene helps explain why there’s not much condemnation from staffers for colleagues who leave for higher pay.
“”Everyone comes here to stand up for something they believe in, and at some point they go downtown to make money, and at some point someone they worked for draws them back [to the Hill],’ said a former staffer who works as a lobbyist. ‘It’s the running joke: a staffer gets married, you better go downtown! Spots open and one of the committee staffers has a kid. They’ll be moving downtown. Money is number one.’”
Individually, you can’t blame them. Private schools in DC cost around $25,000 per year. A lot of these people graduated from law school with $90,000 in debt (that’s around the average these days). But the fact remains that it’s a terrible system for the country. The money is in lobbying, and the environment erodes the qualms that people might have about it going in.
And it’s getting worse. In the 1960s, banking and law paid roughly like being a professor starting out; now they pay about 3-4 times as much, and the pay goes up much faster, too. This inequality problem we have is helping to erode our political system, among other things. Frank is right; we need to pay staffers more. I don’t see any way around it (except paying bankers, lawyers, and lobbyists less, and that’s not under public control).
By James Kwak