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Op-Ed | The American Prospect | October 24, 2022

The Unlikely Origins of the Chamber-Chopra War

Consumer ProtectionEthics in GovernmentFinancial RegulationIndependent AgenciesRevolving Door
The Unlikely Origins of the Chamber-Chopra War

This article originally appeared in The American Prospect. Read the article on the original website.

Last October, Rohit Chopra took the helm as Director of the Consumer Financial Protection Bureau (CFPB), putting lawbreaking corporations on notice and breathing new life into an agency that had languished under Donald Trump. In the past year, Chopra has notched major consumer protection victories for seniors, veterans, student borrowers, and working families.

Naturally, corporate predators are furious. The Chamber of Commerce, America’s largest corporate lobbying group, is waging a smear campaign against Chopra, alleging his anti-fraud enforcement record endangers the financial services industry. This month, they sued Chopra’s CFPB for deeming discrimination an “Unfair, Deceptive, or Abusive Act or Practice,” in a telling break with top Chamber members’ anti-racist photo ops and PR.

The Chamber’s attacks on Chopra are a barely-disguised astroturf effort to let predatory corporations, including several with close ties to Chamber leadership, get away with ripping off the American people.  Yet despite doing the dirty work of corporate scammers, the Chamber maintains an air of respectability in both parties. How does it keep up that influence? Their crusade against the CFPB offers a telling case study.

The Chamber’s anti-CFPB crusade has been led by one seemingly innocuous arm of the lobbying group: the Center for Capital Markets Competitiveness (CCMC). The CCMC has published a barrage of articlesFOIA requests, and letters opposing Chopra’s policies. Led by a cadre of ex-banking industry lobbyists and Republican former Congressional staffers, it enthusiastically praised the Trump administration’s sabotage of the CFPB.

But surprisingly, the CCMC’s origins don’t lie with any of these Republicans, but rather with a prominent Democrat: William M. Daley. Daley, whose brother and infamous father both served 20-plus year stints as mayor of Chicago, is best known for serving as Barack Obama’s third chief of staff and as Bill Clinton’s Commerce secretary.

In 2005, Daley, then a top executive for JPMorgan Chase, was tapped to co-chair the Chamber’s “Commission on the Regulation of U.S. Capital Markets in the 21st Century”, a verbosely titled blue-ribbon group of corporate executives who sought to weaken regulation of the financial services industry. The Commission was part of the Chamber’s response to the 2002 Sarbanes-Oxley Act, a post-Enron securities fraud law. The Commission launched just months after telecom giant Qwest paid a $250 million fine to the SEC for defrauding investors. Tom Donohue, then CEO of the Chamber, sat on Qwest’s board.

In 2007, Daley released a 23-page manifesto for the Commission, co-authored with former Ronald Reagan advisor A.B. Culvahouse (who later recommended Sarah Palin to be John McCain’s running mate). Their policy recommendations read like a corporate fraudster’s wish-list: give the SEC (then run by securities industry ally Christopher Cox) power to exempt certain companies from Sarbanes-Oxley, reduce accounting firms’ liability in audit litigation, and roll back quarterly reporting requirements for public companies. In comments that would age like milk the following year, Daley criticized America’s financial regulatory framework as “deeply rooted in the reforms put in place in the 1930s” and advocated limiting criminal liability action against dominant firms.

Upon its release, watchdog and industry groups saw the Daley report as a clear effort to roll back post-Enron regulatory changes. The American Association for Justice, a plaintiff’s rights group, blasted the report for trying to “brush under the rug the hard-learned lessons absorbed from Enron.” The North American Securities Administrators Association, the oldest international investor protection organization, also rebuked the Daley report. Lynn Turner, the SEC’s former chief accountant, said the report would produce a “significant decline in investor protections.” Even PR Newswire’s Disclosure Advisory Board, a panel of 15 corporate executives, expressed alarm at the Daley report’s desire to eliminate quarterly guidance on earnings per share at all public companies.

Yet Daley, scion of political royalty that he is, suffered no professional consequences for his attempt to weaken securities laws. To the contrary, even after the Great Recession struck the following year, he was rewarded for his backing of looser Wall Street regulation. He was tapped as a top economic advisor to Obama’s 2008 campaign, and co-chaired the Obama transition team as it inherited a historic crisis of the banking industry’s making.

Meanwhile, the Chamber arm that Daley helped launch spent the Obama years trying to kill everything Obama sought to accomplish. While its report has been largely forgotten to history, the Daley Commission’s true legacy is the founding of the CCMC. In March 2007—in tandem with the report’s release—the Chamber formed the CCMC as a new division to lobby Congress pursuant to the Daley Commission’s policy recommendations.

The CCMC went all-out to stop the Dodd-Frank financial reform law, producing campaign-style attack ads claiming the bill’s consumer financial protection agency would crush small businesses. Though they failed to stop the CFPB’s creation, the CCMC’s lobbying efforts helped undermine the law’s rollout and eventually led to its partial rollback under Trump. Among CCMC’s other dirty work for rogue financial institutions was a years-long campaign against the Obama Labor Department’s fiduciary rule, which sought to curb retirement planners’ conflicts of interest and was struck down by a federal court in 2018

Again, Daley suffered no consequences for kickstarting an institution that attacked his new boss non-stop. In 2011, he was picked to be Obama’s third chief of staff—a decision met with praise from the Chamber and bafflement from liberal pundits. In that position, Daley urged Obama to pivot to the right after Democrats’ “shellacking” in the 2010 midterms, and repeatedly advised the President to cut a “grand bargain” on Medicare and Social Security cuts with Republicans. Democratic leaders, particularly the late Senate Majority Leader Harry Reid, were enraged by Daley’s repeated attempts to cut side budget deals with the GOP. Even key members of Obama’s inner circle detested Daley’s management style and pushed for his ouster, leading to his sudden resignation from the post in January 2012.

After two failed campaigns for elected office in Illinois (including a mayoral bid where he raised millions from GOP mega-donor and asset management tycoon Ken Griffin, CEO of hedge fund Citadel), Daley spun through the revolving door once again to become Bank of New York Mellon’s top lobbyist in 2019. When BNY Mellon CEO Charles Scharf left the company for Wells Fargo later that year, Daley followed suit to his current job as Wells Fargo’s vice chairman of public affairs.

The Daley saga illustrates why the Chamber remains so useful to finance-sector lawbreakers seeking to avoid accountability (accounting firms then, consumer lenders now). Instead of lobbying under their own names and risking damage to their brands, companies can hide behind benign-sounding industry associations and rely on their revolving-door staff to have an unrivaled understanding of the regulatory bodies they seek to influence.

Though Daley was the first revolving-door swamp creature to lead the CCMC, he was not the last. CCMC Vice President Bill Hulse, who has authored numerous screeds against Chopra, worked as a lobbyist for the American Bankers Association (ABA) before becoming a high-ranking staffer for Republican Congressman Randy Hultgren—an outspoken CFPB opponent who took over $42,000 in ABA campaign contributions during his time in Congress.

CCMC Senior Director Evan Williams joined the Center after concluding a five-year stint working on banking issues for Scott Tipton and Jerry Moran—two Republicans who have avowedly opposed the CFPB’s work and taken jaw-dropping sums from the finance sector. Before joining the Center in 2021, CCMC Policy Director Will Gardner worked for Wall Street darling Tim Scott and far-right conspiracy theorist Paul Gosar. (Gardner has omitted all mention of Gosar from his resume, but public records indicate he worked at his office for two years).

Ultimately, to protect the CFPB and any other regulator that stands up to Big Business, Democrats must stand up to revolving door patrons in their own party like Daley.  Major ethics reform—whether by legislation or, as the Revolving Door Project has urged, executive order— is a necessary step to close this door for good.

Biden must learn from the mistakes of past Democratic administrations and refuse to let the Chamber smear his best regulators. He should use the bully pulpit to rebut the Chamber’s attacks on Chopra, expose their leadership for the cronies and swamp monsters that they are, and highlight the CFPB’s pro-consumer victories against corporate scammers and predators.

Democrats are flailing for an economic message in the last weeks before the midterms. They should link Republicans explicitly to the unpopular policies of their business lobby backers. As polling data tells us, fighting scammers and rip-off artists isn’t just good policy—it’s also smart politics.

Chopra’s fast start at the CFPB and refusal to back down in the face of corporate smears underscores why America’s biggest white-collar crooks want him and his agency gone. Biden must not let them win.

PHOTO: “President Obama and Chief Of Staff William Daley” (Pete Souza, 5/2/11)

Consumer ProtectionEthics in GovernmentFinancial RegulationIndependent AgenciesRevolving Door

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