This story has been updated. See note at conclusion.
The upcoming retirement of Sen. Chris Dodd (D-Conn.), and what it means for financial regulatory reform, presented an interesting challenge this week for political journalists—and helped bring forward some underlying assumptions about what a “good outcome” is. Whether or not they’re right, the political cognoscenti seem more or less to agree that Dodd—the chairman of the Senate Banking Committee—will want to cement his legacy by shepherding a reform measure into law. But doing so will probably mean retreating from the aggressive bill Dodd proposed in November, which would consolidate banking regulators and create new agencies to monitor financial risk and protect consumers.
The real question for news outlets was how to frame the story. Is Dodd’s retirement a good thing, because his quasi-lame duck status frees him from parochial political concerns and makes it more likely that something called “financial regulatory reform” may pass? Or is it a bad—or at least, complicated—development, because that “reform” may not amount to much?
The Associated Press took the first option, headlining its story, “Dodd Retirement May Help Banking Bill.” The article opens: “Freed from his liberal base and moneyed donors, Sen. Chris Dodd can now cast himself as the honest broker in negotiations over a massive Wall Street regulation bill.”
This makes sense if you think that Dodd’s “liberal base” and his “moneyed donors” have been equally culpable in sabotaging legitimate efforts at financial reform. But the use of that dichotomy here is a little confusing: yes, Dodd’s career has been built on support from these two groups, which are at odds on this issue. But when it comes to financial reform, the important distinction isn’t liberal/rich—it’s non-rich/rich. That’s not how Wall Street presents it, though. The first two quotes in this story come from John Breaux, a former Democratic senator from Louisiana who was famously sympathetic to big business and now lobbies for the financial industry, and Scott Talbott, a lobbyist for banking trade group The Financial Services Roundtable. They’re both pleased as punch that “political motivations” will no longer be shaping the regulations; it’s that sentiment that shapes the top of the story. But here’s a tip: if those two think a news event works in their favor, that event’s probably not doing much to bolster financial reform. (The article does, farther down, talk to consumer advocates, and explore how some reform measures are likely to be sacrificed. But the main theme is that Dodd’s retirement is more likely to prompt a compromise—and that compromise is a good thing.)
Taking a similar tack was The Washington Post, which ran the somewhat wordier headline, “Dodd’s retirement decision may boost chances for financial regulatory overhaul.” The headline doesn’t quite do the story justice: the Post does a much better job explaining that there are serious competing interests at stake here, and that the value of a “financial regulatory overhaul” depends on what’s in the overhaul, and which interests you care about. Still, the WaPo story reinforces the idea that petty partisanship—rather than, say, Wall Street’s entrenched influence among both parties—is the chief obstacle to reform, and thus Dodd’s new “freedom from politics” is a good thing. The closing quote goes to Sen. Mark Warner (D-Va.), who says, cheerily, “If this removes one level of the partisan concerns, so much the better.”
A different—and better—take comes from The Wall Street Journal, which signals its stance right in the headline: “Dodd’s Retirement Muddles Financial Overhaul.” Reporter Damian Paletta gets right to the point:
If Mr. Dodd wants to pass the bill by November to bolster his legislative legacy, Capitol Hill aides said, he and the White House will likely have to water down their proposals and broker a deal with Republicans, who oppose the legislation and have little incentive to give Democrats a victory.
“If Dodd still wants a bill, he can get one; he just has to compromise much more than he would have had to before,” said Mark Calabria, a former Senate Republican aide who is now director of financial-regulation studies at the libertarian Cato Institute think tank. It’s a view echoed by liberal consumer groups.
That Calabria quote does a lot more to help readers understand the situation than the AP odes to bipartisanship from Breaux or Talbott. In fact, Paletta appropriately kicks the quotes from interested parties—both bankers and consumer advocates—to the end of the story. Near the top, though, he offers this tidbit:
Financial executives were mostly measured in their public reaction to Mr. Dodd’s announcement. But privately, several said any legislation that passes will likely be more industry-friendly than what was under consideration even a few weeks ago.