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Warren Could Block Budget Bill Over Dodd-Frank Change

Warren Could Block Budget Bill Over Dodd-Frank Change

By Caitlin Huey-Burns - December 10, 2014

It’s Elizabeth Warren’s time.

No, we’re not referring to a 2016 presidential run -- not yet, anyway. But with a budget deadline nearing and the threat of a government shutdown looming, all eyes are on the Massachusetts Democrat.

That’s because Warren’s chief cause, which helped propel her to progressive stardom, is on the line: Tucked into a 1,600-page appropriations bill released Tuesday night is a provision that rolls back an element of the financial reform bill known as Dodd-Frank. Specifically, it would undo language that essentially prohibits federal protection for certain types of derivatives trades by banks. Republicans argue that many Democratic proponents of the law have supported this revision in the past.

News of the provision -- part of an agreement between Democratic and Republican negotiators -- had Warren fired up and in her element on Wednesday. In a short but impassioned speech on the Senate floor, the freshman lawmaker rallied the troops against the funding bill just as the delicate vote counting process was underway.

“Who does Congress work for?” Warren asked, before presenting the familiar choice of Wall Street/lobbyists/millionaires on one side and everybody else on the other.

Warren then launched into her “rigged system” message that would likely be a staple of any future campaign. “If big companies deploy armies of lobbyists and lawyers to get the Congress deals to benefit themselves, then we’ve simply confirmed the view of the American people that the system is rigged.”

Warren was in her element -- but she is also on the spot. It only takes one lawmaker to hold up legislation in the Senate. If the House bill makes it to the upper chamber unchanged -- and on deadline day, that's a big if -- Warren will have to decide whether to put up a stop sign. The brinksmanship question often asked about conservative firebrand Ted Cruz is being asked of Congress’ best-known liberal.

For now, she is waiting on the House.

“I urge my colleagues in the House, particularly my Democratic colleagues whose votes are essential to moving this package forward, to withhold support for it until this risky giveaway is removed from the legislation,” she said, issuing Cruz-like directions to the lower chamber. Republicans are already casting a message of their own, asking if Elizabeth Warren is going to shut down the government. A Democratic revolt in the House against the bill would signal Warren's clout on Congress.

Warren was one of the masterminds behind the creation of the Consumer Financial Protection Bureau established under Dodd-Frank. That involvement earned her the ire of banks and criticism from Republicans, so much so that she would not have been able to be confirmed by the Senate to lead the bureau she helped construct. It did, however, help her win a seat in the same chamber, one she could hold for a very long time. Her populist message, twinned with humble beginnings, quickly made her a progressive icon.

Warren campaigned for Democrats across the country this year in places where President Obama wasn’t welcomed. She has denied any interest in challenging Hillary Clinton for their party’s presidential nomination, but activists are trying to push her in that direction. Regardless, her message comes at a time when Democrats are engaged in some serious soul-searching after a bruising election that will make them the minority in Congress next month. The party is divided on its economic message, and Warren has come to symbolize one aspect of it.

The funding legislation, approval of which is needed by midnight Thursday to keep the government running, is being considered first in the House, where Democratic uproar over the Dodd-Frank provision and one that dramatically increases the caps on campaign contributions to party committees, threatens to derail the bill. Minority Leader Nancy Pelosi said she was “deeply troubled” by the two provisions, saying, “We must get them out of the omnibus package.”

Pelosi circulated opposition statements from key groups and figures, including one from former Rep. Barney Frank, another architect of the financial reform bill. Frank said he is concerned the insertion of this revision will lead to more unraveling of the law. “How to regulate derivatives is a question about which responsible people can differ, and the subject of what insured banks should be doing in this area is a legitimate subject for debate,” Frank said, “but not for a non-germane amendment inserted with no hearings, no chance for further modification, and no chance for debate into a mammoth bill in the last days of a lame-duck Congress.”

It’s unclear whether House Speaker John Boehner has enough Republican votes to pass the bill as is. Some conservatives are expected to oppose the funding measure because they believe it doesn’t do enough to thwart Obama’s executive action on immigration. If it becomes clear that Democratic opposition is too strong to let the measure pass, Republicans are prepared to move ahead with a short-term funding bill to keep the government open until next year and allow a new, Republican-controlled Congress to revisit the appropriations.

But if the larger bill passes the House, it faces an uncertain fate in the Senate. On the floor Wednesday, Warren said she believes Democratic negotiators did what they could, and blocked what she viewed as more harmful changes to the law. “But this provision goes too far,” she added.

Warren blasted a bill “negotiated behind closed doors” that would “let derivatives traders on Wall Street gamble with taxpayer money, and once again get bailed out by the government when their risky bets threaten to blow up our financial system.”

“There was no debate, no discussions,” she said, slamming a deal which she said was backed by CitiGroup.

“This is a democracy and the American people didn’t elect us to stand up for CitiGroup. They elected us to stand up for all the people,” Warren said. 

Caitlin Huey-Burns is a congressional reporter for RealClearPolitics. She can be reached at chueyburns@realclearpolitics.com. Follow her on Twitter @CHueyBurnsRCP.

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