Advocates: Idaho Rep. Minnick's vote against consumer watchdog aligns him with big business

WASHINGTON - When a House committee last week passed legislation to create a federal watchdog agency to oversee home loans and other consumer credit, Rep. Walt Minnick of Idaho was one of only two Democrats to vote against the beefed-up regulations sought by the White House.

Minnick, who supports regulatory reform, said he voted against the proposal because he does not want to see the creation of a new federal watchdog, known as the Consumer Financial Protection Agency. He has floated his own proposal that toughens regulations but does away with the "agency" part of the reform. He also says he'll consider voting for the final bill when it reaches the House floor.

But consumer advocates say his "no" vote Thursday, when the bill came before the House Financial Services Committee, established Minnick firmly on the side of banks and organizations like the U.S. Chamber of Commerce, which has spent upwards of $2 million in its campaign to kill the proposed consumer protection agency.

So far this year, commercial banks have spent $25 million on lobbying, said Common Cause, a public interest group that focuses on money in politics. Finance and credit companies spent an additional $16.7 million on lobbying this year, the group found. Common Cause says that's a combined lobbying total that equals about $229,415 a day in the first six months of 2009 - when Congress has been focused on strengthening consumer financial oversight.

"In the wake of the collapse of the economy that was due in part to a lack of government oversight, one would think that Congress would be more willing to perform its job here and represent the public interest," said Bob Edgar, president of Common Cause. "But once again, members appear to be bowing to the wishes of their special-interest contributors."

Stronger financial regulation is among the top priorities of the White House, which wants to see a standalone agency that will protect consumers and avoid the sort of financial meltdown that led to the current economic crisis. In a statement following Thursday's vote, President Obama zeroed in on the influence that the country's financial services industry has over Congress.

"They are doing what they always do - descending on Congress, using every bit of influence they have to maintain the status quo that has maximized their profits at the expense of American consumers, despite the fact that recently those same American consumers bailed them out as a consequence of the bad decisions that they made," Obama said.

MINNICK GETS CAMPAIGN CASH BUT DENIES INFLUENCE

Minnick himself has been the beneficiary this year of more than $27,000 from credit card companies and banks, Common Cause found.

In the most recent fundraising quarter, for example, the CEO of Raymond James Financial, Thomas James, gave Minnick the maximum contribution: $2,400. Greg Lovell, the president of First Bank of Idaho, gave $1,000. Thomas Prohaska, the president of Idaho Trust National Bank, gave $500.

This year, political action committees with ties to the financial services industry are among Minnick's biggest givers. They include the Financial Services Roundtable, Goldman Sachs, the Securities Industry and Financial Markets Association, the Online Lenders Alliance and the Independent Community Bankers Association. In the most recent quarter, the American Express political action committee gave $1,500. Bank of America's PAC gave $4,000, and National Association of Realtors' political arm gave $1,000.

Minnick rejects the notion that campaign contributions influence his stance on bills. And he disagrees with the assertion that he has sided with big business. He said he sides 100 percent with the Obama administration: consumer financial regulatory reform is needed, Minnick said. He just differs in how to get there.

"I think we owe to the president to give him a bill that accomplishes his objectives, which I fully support," Minnick said after Thursday's vote. "I'm very supportive of the overall bill, and it's essential that we pass a comprehensive financial re-regulation bill. But we want to do it right."

IDAHO COMMUNITY BANKS OPPOSE AGENCY

Community banks in Idaho have complained that a new regulatory agency would bring onerous, expensive regulation, Minnick said. His own proposal would create a consumer financial protection council made up of existing state and federal regulators. He objects to having one regulator overseeing the financial security of a bank and another making the rules that protect customers.

Minnick's idea, when first broached, drew the support of Dawn Justice, president and CEO of the Idaho Bankers Association. It "seems to provide many of the same consumer protections and strengthened regulatory benefits of the Obama plan, but does it with far less bureaucracy at a far lesser cost," Justice said in a statement.

Consumer groups, however, have been more critical. The Consumer Federation of America last month called Minnick's proposal little more than the status quo.

"We think that if a bank is offering a product that is sustainable and suitable and appropriate for a consumer, they should not have any problems with a Consumer Protection Agency," said the federation's spokeswoman, Susan Weinstock. "It's not another layer of bureaucracy. It's an agency with a mission focused on consumers."

They're not going to let stronger financial oversight fail, said Ed Mierzwinski, the consumer program director for the U.S. Public Interest Research Group.

"The financial system failed to protect consumers and led to a collapse of the world economy," Mierzwinski said. "Congress saved the banks, but it hasn't yet made sure that what they did won't happen again. We're going to fight that, and the president's going to fight."

MINNICK'S IDEA FINDS FOE IN BARNEY FRANK

Minnick's proposal also fell flat with the chairman of the House Financial Services Committee, Rep. Barney Frank, D-Mass., typically a fan of the Idaho Democrat, but who in this case hewed closely to the Obama administration's wish for a consumer-friendly regulatory agency.

"Generally he's been very constructive, but I did disagree," said Frank, whose own political campaign gave Minnick $2,400 this year.

Minnick's role on Frank's committee is closely tied to his ability to raise campaign contributions. That's because members of the House Financial Services Committee raise about 10 percent more money for their re-election campaigns than the rest of their House counterparts.

House members who sat on the Financial Services Committee in 2008 raised about $150,000 more on average for their re-election campaigns than those not on the committee, according to an analysis by the Center for Responsive Politics, a nonpartisan research group that tracks money in American politics.

The committee is widely acknowledged as a spot for vulnerable freshman incumbents, such as Minnick, who need the campaign cash to run competitive campaigns that will help them remain in office. Minnick got to office by narrowly defeating one-term Republican Bill Sali, and he remains one of the leading targets of the National Republican Congressional Committee.

MOST OF MINNICK'S CONTRIBUTIONS FROM FINANCIAL SECTOR

Already, Minnick has drawn three Republican opponents in a district where 62 percent of voters cast presidential ballots for GOP presidential candidate John McCain in 2008.

Minnick in August cited the pressure of fundraising when he told 400 people at the Boise City Club that he had skipped a meeting with University of Idaho officials because he was behind on his money-raising targets for the quarter. Instead, Minnick told them he got on the phone to solicit contributions.

Like many vulnerable lawmakers on the House Financial Services Committee, Minnick raises the bulk of his money from the financial services industry, including the political action committees of community banks and other banking industry types with an interest in the outcome of the regulatory legislation.

Minnick acknowledged in an interview last month that it's "natural that people in that community will be looking at me," because he has a seat at the table where financial regulations are being discussed.

But he also said that his campaign donors are "absolutely irrelevant with respect to the legislative decisions I make," adding that he does not accept donations from tobacco companies, large oil companies or big box retailers. Companies such as Wal-Mart are "fine businesses," Minnick said, but he competed with them when he ran his own business and has chosen not to accept donations from such retailers.

Erika Bolstad: (202) 383-6104