In July 2010, nearly two years after the 2008 financial crisis exposed the vulnerability of the world’s economic system, Congress passed sweeping changes to laws regulating the U.S. financial industry. Washington Post associate editor Robert G. Kaiser persuaded the bill’s main sponsors, Rep. Barney Frank (D-Mass.) and Sen. Christopher J. Dodd (D-Conn.), to give him behind-the-scenes access to observe the bill’s journey from conception to enactment, an 18-month odyssey that involved extensive maneuvering and dealmaking. This account of one deal, reported here for the first time, is drawn from Kaiser’s new book, “Act of Congress: How America’s Essential Institution Works, and How It Doesn’t.”
The most ambitious legislative effort to reform the country’s financial system in nearly 80 years was just a few weeks old, and already the bill was in trouble.
Members of the House Financial Services Committee, the bill’s first stop in the summer of 2009, were facing a barrage of complaints from hometown bankers and the industry’s army of Washington lobbyists. They wanted to block the creation of an independent regulatory agency aimed at protecting consumers from the risky financial products that had helped bring on the Great Crash of 2008.