As President Barack Obama began to craft his massive Wall Street regulatory reform proposal this year, he ran smack into opposition from an unlikely Democratic source: guitar-playing, cigar-chomping Rep. Collin Peterson, who represents the nation’s No. 1 sugar beet farming district in Minnesota.
What’s even stranger is that Peterson, the chairman of the House Agriculture Committee, won the financial fight and blocked a proposal that would have destroyed a regulatory agency he favors.
And with the release of Obama’s scaled-back proposal Wednesday, Peterson says happily, the administration seems to be “pretty much back in line.”
The behind-the-scenes battle reflected the strange power that agricultural-state lawmakers had over the crafting of the sweeping Wall Street reforms. It took place along a long-standing Washington fault line: congressional prerogative vs. executive fiat.
At issue was the administration’s proposal to merge the Commodity Futures Trading Commission and the Securities and Exchange Commission. The idea wasn’t merely to do away with one set of impenetrable Washington acronyms but, rather, to merge the oversight of securities, like stocks and bonds, and futures, which are contracts to buy specific items in the future — hence the name.
Futures have long been associated with the nation’s agrarian past, because farmers buy and sell contracts for specific commodities like corn, wheat or the sugar beets grown in Peterson’s district in Minnesota.
If Obama’s plan went through, the Agriculture chairmen would lose their reach into the global financial industry.
Enter Peterson. A conservative Democrat and former accountant, the 10-term congressman has been a staunch defender of agriculture interests in a House caucus dominated by party liberals. And this time, he took his case straight to Treasury Secretary Timothy Geithner.
Peterson and House Financial Services Committee Chairman Barney Frank (D-Mass.) joined with other members of Congress on June 3 for a 7 p.m. dinner at the Treasury Department. Peterson said Geithner made another push for the merger.
“In a perfect world, I think they would have liked to do this, but it’s not necessary,” Peterson said of the Obama administration. “Why pick fights that are not necessary?”
One of the reasons it would have been such an enormous fight, say cynics, is the proposal would mean farm-state members would lose the campaign contributions that come with their financial oversight authority.
After all, farmers are not the biggest campaign contributors to members of the House and Senate Agriculture committees. Financiers are.
In the 2008 election cycle, reports OpenSecrets.org, financial, insurance and real estate interests gave more than $28 million to members of the Senate Agriculture Committee in political action committee and individual contributions. Agribusiness interests were completely overshadowed, giving slightly more than $10.6 million.
For Peterson personally, the margins were reversed, with $542,000 coming from agribusiness and $112,000 coming from the financial sector in the 2008 election cycle, OpenSecrets.org said.
It was a similar picture in the House, where finance, insurance and real estate PACs and individuals gave more than $8 million to members of the Agriculture Committee, while the agribusiness industry could muster only $7 million in contributions.
But members of Congress who resisted the merger say their gripe wasn’t about authority or contributions but because there’s no need to merge agencies in the midst of a crisis.
Asked why it’s a bad idea, Peterson — who has said campaign contributions played no role in his position on the issue — cites a previous effort to reshape the bureaucracy in the midst of a crisis that ended up with decidedly mixed results.