The cost of showboating

How much better a deal could Harry Reid have gotten on financial reform if Russ Feingold had voted “No” on final passage but “Aye” on cloture?

So financial reform passed, as health care passed, with exactly the 60 votes needed to overcome a filibuster.  (The filibuster must die, but that’s a debate for later.)

Every Democrat voted for it but Russ Feingold.  With the W.Va. seat still vacant, that meant that Reid needed Snow, Collins, and Scott Brown, as well as Ben Nelson. Note that Feingold wasn’t voting against the bill:  he was voting with the Republicans to prevent the bill from being voted on.

The bill as passed exempts at least three major sources of consumer maltreatment in the financial market:  car loans, payday loans, and check-cashing services. It omits the $19B bank tax to pay for bailouts. It has a very weak form of the “Volcker rule,” thus leaving the country exposed to future meltdowns.  Those concessions were the price of those last four votes.

Question:  How much better a deal could Reid have gotten if he’d only needed three of those four:  if Feingold had voted for cloture, even if he wound up voting against final passage?  The answer is the price of Russ Feingold’s integrity narcissism. I’m sure all the poor people who keep getting cheated by payday lenders will be glad to know that the Junior Senator from Wisconsin is an independent thinker.

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: Markarkleiman-at-gmail.com

17 thoughts on “The cost of showboating”

  1. Yeah, the bill would have been even better if it had cut off all credit to poor people, instead of just most. As it is, they might still be able to buy cars and cash their paychecks. Maybe a second bite at this apple will put us where you want, where they get only what the party supplies them, and they know who to thank.

  2. The idea that strip-mall hucksters are the only source of credit for poor people is a myth created and distributed by strip-mall hucksters. Credit unions offer short-term loans to members (lifetime membership cost usually something like $5). Some credit unions will even charge 400% interest, if you want the full strip-mall-huckster experience, although not all do. And the NCUA is developing rules to limit their charges (http://tinyurl.com/2essm4x).

  3. This sort of hangs on whether you think the alternative to a payday lender is a real bank, happily lending money to upstanding wage-earners in the inner city at 8%, or a loan shark, at 50% and break your legs if you don't pay. I'm inclined to think it's the loan shark, myself.

  4. Although I don't agree with Feingold, I'm inclined to think that Mark's tolerance for political BS is dependent on whether the purveyor of that BS is Obama or Feingold.

  5. I think you're overlooking that whether or not you got Feingold rather than one of the other 4 is irrelevant. If this is the difference between 59 and 60 rather, than 57 to 60, then you're onto something. But Feingold's basis on this has always been that the bill would need to be stronger than what it was, that it was missing key components that would prevent problems in the future. Whether you think the bill is weaker because of Feingold is probably speculative at best since concessions would have been needed anyway. And considering that the bill passed with the same 60 votes as what voted for cloture, then clearly no one was voted to close debate and then voting their conscience. Except for Feingold, no one else in the Senate did that.

    If you decide that hippy punching Feingold for not "falling in line" is the answer, then perhaps you should consider what is needed in the future to realign the Senate under a more parliamentary style, which would render individuals like Feingold irrelevant. And it's more than just the filibuster that would have to be changed….

  6. Why would you think negotiating with three centrists is materially different than four? We've seen what one can do.

  7. Additionally, how do you know that losing a vote from the left didn't help convince this group that further concessions would be difficult?

  8. To add to what Lars said, I think Brown, Snow and Collins are a pacakge: None of them were prepared to jump without the others. Thus you need all three no matter what Feingold does.

  9. Simple arithmetic seems to indicate that this was, in fact, a fine opportunity for Sen. Feingold to vote his conscience, as doing otherwise would not have changed the balance of power in this case.

    The worst side-effect of Feingold's vote is that it gives ammunition to the hippie-punchers in our midst. But irritating as they may be, the Sensibles have about as much influence on the course of events as do hippies, so I'd say that's a small price.

  10. @Dave Schutz

    This sort of hangs on whether you think the alternative to a payday lender is a real bank, happily lending money to upstanding wage-earners in the inner city at 8%, or a loan shark, at 50% and break your legs if you don’t pay. I’m inclined to think it’s the loan shark, myself.

    Dave, are you aware that payday loans have annualized percentage rates that ranges from "only" a few hundred percent to approaching a thousand percent? That they typically charge more than loan sharks? That the average customer borrows nine times in one year, often back to back, paying significantly more than the principle over that time?

    I'm not cheerleading for the loan sharks here, but at least they're not sanctioned by law. Payday lenders are an exploitative blight on the nation, and few will mourn their passing, their investors excepted.

    ..

    Lars, David, eb: So, your argument is that Feingold was grandstanding because he knew it was meaningless? if so, then (1) how can you be sure that Brown, Snowe, and Collins came as a package, and that even a moderately better bill might not have been available with Feingold, Snowe, and Collins or with Feingold, Brown, and whoever emerges from West Virginia? And (2) what about the effects on the public discourse of his behavior? Remember, your theory is that Feingold wanted the bill to pass but that, knowing that this version could pass without his support, he chose to oppose cloture on it. And in the process he denounced this bill (which, remember, you say he wanted to pass) as being a sell-out and unworthy of passage. In what way is that not self-indulgent behavior?

  11. (1) I'm not sure. But Kleiman seems sure that, had Feingold voted for cloture, at least three other Senators would have stopped demanding concessions which seems at odds with their past behavior. If one wants to throw around phrases like "integrity narcissism" and "voting with the Republicans" one should probably offer some evidence for your position.

    (2) Ideally, it would let the media and the public know that there are objections to under-regulation from the left. In practice, It apparently gives people like Kleiman a chance to hang payday lenders around the necks of the left. Thanks, Kleiman!

  12. How long do you think you can keep asking progressives to give up their beliefs and 'take one for the team' before they say no?

  13. Isn't it strange that Feingold's Rigidly Ideological Progressivism that forced him to be 'too pure' to vote for this bill — thus coining the term 'RIPping a bill' — didnt stop him from being the one major Democrat who continued to insist that John McCain was, even if frequently wrong, 'qualified to be President' — a defense of McCain that — iirc — continued even after he'd chosen Palin.

    As for 'loan sharks' vs 'payday lenders' — at least the sharks are real people who will — at least occasionally — 'cut you a break' if something bad happens. "Yeah, man, it's rough, your wife getting cancer and all. My mom went through that, know what you're gettin' into. Let's just tear this up and call it even — this time, only just don't tell nobody I did it for you." Okay, it might not happen often, but it must sometimes. I don't see a guy in a suit and an office calling his boss out of state — who he's probably never even met — and getting you a break.

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