Vulnerable GOP Frosh Cashing In On Party's Attempt To Roll Back Wall Street Reforms

April 19, 2011 2:55 pm ET — Alan Pyke

The Republican leadership has found a clever way of exploiting Wall Street's desperation to undo last year's financial regulatory reform bill, which aims to prevent a repeat of the 2008 financial crisis by making the industry accountable for its failures: They've put Wall Street's legislative interests in the hands of first-year members from swing districts.

Five vulnerable House GOP freshmen who were placed on financial services subcommittees have introduced five separate bills that chip away at different pieces of the landmark Wall Street reform bill known as Dodd-Frank. Investigative reporter Merrill Goozner, writing for a joint project of the Center for Responsive Politics and the Fiscal Times, explains:

The commonality among the five bills? They were all sponsored by freshman Republican legislators holding coveted committee spots, who were showered with campaign donations from financial industry groups immediately after the November elections, according to an analysis by The Fiscal Times and the Center for Responsive Politics. 

The freshmen - Steve Stivers of Ohio, Robert Hurt of Virginia, Michael Grimm and Nan Hayworth of New York, and David Schweikert of Arizona -- all hail from swing districts. Each won with 54 percent of the vote or less and will likely face tough reelection battles in 2012 when Republicans seek to maintain control of the House. [...]

Long-time Republican operatives say freshmen legislators with scant legislative experience were anointed by GOP leaders and wound up sponsoring bills that would clearly benefit the bottom lines of firms in the financial services industry.
"It's orchestrated. The leadership is trying to take care of them," said Ed Rollins, a [GOP consultant and Huckabee 2008 veteran].

The article goes on to note that "Stivers alone raised at least $220,500 since the Nov. 2 election with nearly half coming from the finance, insurance and real estate [FIRE] industries," but "both legislators and industry representatives deny any connection between the money and legislative outcomes."

That denial strains credulity, especially since the financial industry rushed into the fundraising breach for these members immediately after the election. While FIRE funding was less than a quarter of 2010 campaign funding for Reps. Grimm, Stivers and Hurt, those industries have become primary underwriters for the trio since November. Eighty-five percent of Stivers' re-election fundraising and 61 percent of Grimm's haul since Election Day come from industries with a natural interest in weakening the Democrats' regulatory overhaul for financial firms, according to the CRP/FT report. In Hurt's case, FIRE funding has jumped from just 10 percent of his bankroll last cycle to a full third of his post-election fundraising.

Despite popular support for new regulations, the GOP welcomed Wall Street's generosity and influence when the Dodd-Frank legislation moved toward the finish line last spring. When the bill passed, Wall Street swung their contributions dramatically to Republicans, and the GOP has been hard at work watering down the reform package. Now it appears the party is leveraging the financial industry's deregulatory fervor to shore up five of their most vulnerable House seats.