Fighting to regulate the big boys

By Steve Dzielak

Most U.S. Senators win arguments or get legislation passed relying on horse-trading, muscle and bluster. Not Maria Cantwell. The junior senator from Washington State does her homework, then fights for what she believes is right.

Ask smart people in DC who is the toughest, best-informed Congressional combatant for effective financial regulation. Few will say House and Senate financial committee chairs Barney Frank or Chris Dodd. The answer you’re more likely to get is the junior senator from the Evergreen State.

Dismayed by what she’s seen to date, Cantwell continues to push the Obama administration for systemic financial reforms. "If there are people at the Treasury and the White House who think that the way to get the economy going again is not to close these loopholes, that’s disgusting," she said.

During last year’s committee work on healthcare, Cantwell salvaged some of the cost-containment goals of the doomed public option. Her amendment, modeled on a Washington State program, allowed all states to negotiate the terms of insurance coverage for those eligible for subsidies, and for others buying in on their own. But the most lasting impact of her diligent approach to public policy is likely to come from her fight for the regulation of derivatives— those abstract securities based mathematically on real economic transactions.

"There's a few people in the administration,” Cantwell said at a hearing in May, “who are slow-walking, thinking we're all going to forget about this regulatory reform that is needed, I can assure you that we're not going to forget."

Cantwell, 51, grew up in Indiana. The daughter of a Congressional staffer, she moved to Seattle and at 28 won a seat in the state legislature. In 1992, she became the first Democrat in 40 years to win in the First Congressional District.

She lost her seat in the 1994 Republican landslide. Offered the top marketing job in RealNetworks, she was quickly promoted to executive vice president.

She resigned in 2000 to make her Senate run, beating incumbent Slade Gorton by 2,229 votes. Serving on the Senate Energy and Natural Resources Committee at a time of soaring electricity rates, she mastered the details of electric-power regulation, which led her directly to derivatives abuses.

In 2007 and 2008, when oil prices were spiking, Cantwell led an effort to have regulatory agencies investigate market-rigging. Many industry pros scoffed at the idea, but Cantwell continued to raise the issue, and in 2009, the Commodity Futures Trading Commission (CFTC) concluded that she was right.

A few months into the Obama presidency, Cantwell pressed Treasury Secretary Timothy Geithner to empower the CFTC to monitor trades to curb their volatility. Geithner balked, but Cantwell pressured the White House. One observer said she “played hardball like few liberals do anymore.”

In May, Geithner made explicit commitments to give new powers to the CFTC, but as Cantwell later said, “It’s not unheard of in D.C. to feign a commitment and then not fight hard to have the legislation pass.” Sure enough, in June, the Treasury Department released a white paper weaker than Geithner’s earlier commitments, and the financial reform legislation Geithner sent to Congress in August was weaker yet.

The loopholes were widened further by the House Financial Services Committee and were not resisted by the administration “The Treasury Department should be ashamed of themselves,” Cantwell said.

“Treasury has gone back on their original commitment,” Cantwell says. “The battle lines have been drawn.”