Midway through Elizabeth Warren’s fire-breathing campaign to tank a bank deregulation bill backed by more than a dozen Senate Democrats, Chuck Schumer invited her to his office.
Warren had just sent a fundraising email blasting fellow Democrats who supported the legislation, and Senate Democrats had just had an ugly caucus meeting at which the rift over the measure was laid bare. And now Schumer wanted to hear what was on the mind of one of his most prominent senators, according to a person familiar with the conversation.
“This is what I said I was going to do,” Warren told the Senate minority leader in a lengthy conversation last Wednesday, the person said. “This is why I ran for the Senate.”
Schumer didn’t tell Warren to stop attacking the bill or to dig in. But he urged her to focus her opposition on the bill’s policies — not individual Democratic senators, as her fundraising plea had done, said a second person briefed on the conversation. Still, Warren largely stuck to her hard-edged tactics in the days afterward, regularly lashing what she calls the “Bank Lobbyist Act” and those who support it.
For Schumer, the banking bill and its rollback of some of the Dodd-Frank financial reform law’s regulations has been quite the tightrope to walk. The minority leader has to balance the needs of moderate caucus members who are desperate for a bipartisan accomplishment heading into brutal reelection races, and the priorities of liberals like Warren who believe they are fighting for the heart and soul of the Democratic Party. Plus, the New Yorker is already viewed with suspicion by liberals for his own ties to Wall Street.
Though Schumer opposes the banking bill, the typically chatty senator has been remarkably quiet about it. He’s said very little publicly about the legislation since it was introduced four months ago, and privately has not whipped against it or tried to stop it, according to senators and aides. Instead, as he did with Warren last week, Schumer has been mostly listening and counseling his members behind the scenes.
“It’s a painful and challenging issue for him,” said Senate Minority Whip Dick Durbin (D-Ill.), Schumer’s deputy. “Chuck has done this as well as he could. This is really the first time since he’s been Democratic leader that there’s been a significant split in the caucus. And it’s inevitable. It’s awkward.”
POLITICO first inquired about Schumer’s position on the legislation in November, as the bill was changing and winding through committee. Finally, in March he came out in opposition to the bill as it came to the floor. People who speak frequently with Schumer argue that he’s always been in a no-win situation and that trying to derail it now would serve only to trample on what might be his moderate members’ signature bipartisan law in an election year.
The minority leader has essentially been playing to both sides of the banking debate, caught between competing factions of his caucus and seemingly unable to head off the warring Democrats, according to interviews with more than a dozen Democratic senators of all ideological stripes.
Asked about the issue Tuesday, he avoided attacking the bill or its critics, focusing instead on procedure and ignoring the lingering tension within his ranks.
“There’s broad agreement in our caucus that community banks deserve some [regulatory] relief,” Schumer told reporters.
“But Republicans forced other amendments not related to community banks,” he added, saying that he opposed ending debate on the bill “because I want to see amendments.”
Warren is also pushing for votes on 17 separate amendments she has offered intended to crack down on big banks and protect consumers. But GOP leaders are eager to move on to a final vote this week after spending nearly two weeks of floor time on the measure. The far-reaching bill would relax rules for a range of small and large lenders. It’s the biggest change to financial regulations since Democrats enacted Dodd-Frank in the wake of the 2008 Wall Street meltdown.
Meanwhile, the brutal fight over the legislation continued in Tuesday’s Democratic caucus meeting, according to senators. Democrats readily admit this has been perhaps the toughest internal battle of Schumer’s 15-month tenure as leader, worse even than when Democrats stumbled into a three-day government shutdown over immigration, though they say the party will get over it.
“It’s not for Chuck to cause us not to disagree, it’s for Chuck to make sure we keep our disagreements within certain boundaries,” said Sen. Brian Schatz (D-Hawaii), who opposes the bill. “This will pass, which is not to say tempers didn’t flare.”
“We’ve been through a lot worse, and we’ll get through this,” Sen. Tom Carper (D-Del.) said of the caucus’ charged climate surrounding the banking bill. Carper supports it.
Schumer was warned by liberals, particularly Warren, early on that they would forcefully make the case against legislation they argue would risk another financial crisis, according to Democratic sources. And on a conference call on Tuesday, Warren defended Schumer as a stalwart foe of the measure.
“He has spoken against the bill in caucus meetings and he voted against moving the bill forward,” Warren said. “He has pushed against this bill from the very beginning.”
The idea of helping out community banks that argue post-financial crisis regulations imperiled their ability to make loans has long been popular in both parties. But though Senate Banking Chairman Mike Crapo (R-Idaho) and ranking member Sherrod Brown (D-Ohio) began talking about a bipartisan solution last year, the talks broke down.
After that impasse, Schumer gave the banking bill’s Democratic backers the green light to continue working with the GOP, according to moderate senators. He never told them to stop working on the bill. His message to the caucus was: “Everybody do what they got to do,” according to moderate Sen. Joe Manchin (D-W.Va.).
“Sen. Schumer said, ‘Look, if you guys can get it out of committee, you guys can get great bipartisan support, we’ll facilitate a floor vote,’” said Sen. Heidi Heitkamp (D-N.D.).
Privately, some Democrats argue that at the very least, Schumer should have tried to shut down the battles between Warren and moderates like Heitkamp and Manchin who face tough reelection races this year. Those critics say that Warren has made misleading arguments against the bill and that Schumer could have stopped it.
But publicly, none of the 16 Democrats who voted to advance the bill last week have had a harsh word for their leader’s handling of it. Sen. Chris Coons (D-Del.) suggested that Schumer had staved off long-term damage, saying Schumer “worked very hard to find a path forward here that allows the caucus a chance at being unified as we face other legislative challenges.”
Sen. Robert Menendez (D-N.J.), who opposes it, agreed: “I’m against the bill, but when there are different voices, I think the leadership has allowed all voices to be heard.”
Meanwhile, some liberals off the Hill questioned the political wisdom of Schumer freeing up so many Democratic votes to loosen bank regulations. As the party pitches itself to voters with a promise to fight for their interests, liberal activists say the banking bill sends the wrong, pro-corporate message and argue Warren’s argument is in line with the Democratic base.
But given that the bill had 10 Democratic Caucus co-sponsors as of November, Schumer would have struggled to block the bill even if he tried, senators said.
“The power of Wall Street and the way that Wall Street convinced community bankers that they should have a bill that included breaks for Wall Street made it very hard to defeat,” Brown said. He added it was “inaccurate” to say Schumer didn’t try to stop the bill. “It’s really hard.”