Subject: Washington Post: Sen. Kaufman of Delaware tests the big-bank theory
From: "Eric Schwerin" <[email-masked]>
To: "Hunter Biden" <[email-masked]>, <[email-masked]>
Date: Tue, 27 Apr 2010 16:11:11 -0400

Sen. Kaufman of Delaware tests the big-bank theory
Tuesday, April 27, 2010; A15

When Congress excluded the public option from its landmark health-care  
bill, the leading voices in opposition from the left were familiar  
figures such as Howard Dean, liberal bloggers and members of the  
Congressional Progressive Caucus.

On the other hand, Sen. Ted Kaufman (D-Del.) was virtually unknown  
until a few months ago. But the debate on financial regulatory reform  
has turned Kaufman, an appointed senator, into a liberal hero as he  
seeks to break up the largest banks in the country. Under his  
proposal, no bank could hold more than 10 percent of the nation's  
total deposits, and banks could have liabilities up to only 2 percent  
of the nation's gross domestic product. Such provisions, he says,  
would force banks such as Bank of America to shrink.

Obama administration officials and top Democrats on Capitol Hill have  
not directly criticized Kaufman's idea. But they say the current  
version would empower regulators to monitor the size of banks and  
their risks to the overall economy and break up banks if necessary.

And Obama economic adviser Lawrence H. Summers said on PBS last week,  
"Most observers who study this believe that to try to break banks up  
into a lot of little pieces would hurt our ability to try to serve  
large companies, and hurt the competitiveness of the United States."

Kaufman said regulators have not used that power and will not do so in  
the future. His plan, he added, is the best way to prevent bailouts of  
big banks.

"What do we have to do before someone sends the message that these  
things are too big and that this Congress cannot pass the buck to the  
regulators who didn't do the job in the past?" he said. "What are we  
doing now as senators on the floor, passing legislation based on the  
fact 'I trust my regulators now'? Why aren't we passing legislation  
that will work over the next two or three generations?"

Kaufman, who served as a Senate aide to Joseph R. Biden for more than  
20 years, has hammered the issue in speeches for weeks. As the debate  
on regulatory reform dominates congressional discussion, four other  
Democratic senators have joined his cause.

He is also, at least among liberal activists, no longer anonymous.  
Arianna Huffington has raved of Kaufman: "What conditions helped turn  
him into a fearless crusader? And how do we get more like him?"

Kaufman is an unusual kind of senator, part of a small club that once  
included three but is down to two. Paul G. Kirk Jr. was a longtime  
aide to Sen. Edward M. Kennedy (D-Mass.) and served in his old boss's  
seat briefly until Republican Scott Brown was elected. George S.  
LeMieux, a former chief of staff to Florida Gov. Charlie Crist,  
remains in the Senate as the replacement to Republican Mel Martinez.

Kaufman was surprised when Biden, days after being elected vice  
president, proposed that his former aide should replace him; Kaufman  
had never held public office. Gov. Ruth Ann Minner (D) made it  
official by appointing him.

Kaufman immediately said he would not seek a full term, and it was  
widely assumed he was a caretaker of the seat for Beau Biden, the vice  
president's son and Delaware's attorney general. But Biden opted  
against a run for the seat in November. Rep. Michael N. Castle (R- 
Del.) is now the front-runner, but Kaufman, 71, still has no plans to  
run.

"I've never been elected to anything, I was never the class president,  
not even in third grade," he said. But he added: "It's much easier  
than I thought it would be. When I taught my courses [at Duke  
University], I would tell students, 'I would never want to be a  
senator; that's not what I want to do, and staff is really important.'  
Now the one message I give to chiefs of staff is 'You could be a  
senator, too.' "

Kaufman, with no need for fundraising or raising his profile, has  
largely toed the party line on key issues. Before regulatory reform,  
he was perhaps best known in the Senate for giving a speech every week  
in praise of a federal employee, reflecting his view of the importance  
of the much-maligned "Washington bureaucrats."

At the same time, the graduate of the University of Pennsylvania's  
Wharton business school had long been interested in financial issues,  
and he saw an opening in February and March as much of the Senate  
remained focused on health care.

His strong rhetoric and the obvious populist appeal of his stand may  
not carry the day, however. No Republican has formally endorsed his  
proposal. And if the two parties reach a compromise on the  
legislation, Kaufman's provision may not even come up for a vote: Some  
Democrats and Republicans who oppose his provision may not want to  
want to go on record opposing a provision to shrink big banks, an idea  
likely to be popular with the public.

Kaufman, while eager to make his case publicly, has been unwilling to  
use his ultimate trump card: his long-standing relationship with  
Biden. He says the two speak regularly, but Kaufman has not asked  
Biden to back his bank proposal, nor will Kaufman blast the  
administration in his speeches.

"I am a senator; I think this is what a senator does," he said,  
referring to giving speeches and offering amendments. Referring to  
Biden, he added: "He is one of my best friends, but he's never called  
me [since Kaufman entered the Senate] and said, 'I really want you to  
do this.' And I never call him up."

Eric D. Schwerin
Rosemont Seneca Partners, LLC
1010 Wisconsin Ave., NW
Suite 705
Washington, DC 20007
(202) 333-1880
[email-masked]
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