One obvious question when Connecticut Senator Chris Dodd announced his retirement last week was what impact it would have on the effort to reform Wall Street. Dodd is chairman of the Senate Banking Committee, and the bill he wrote last year is the most ambitious regulatory initiative pending in Congress. Anything that changed Dodd’s calculus could have huge implications, which is why I was intrigued by a headline in the following day’s Wall Street Journal proclaiming that, “Dodd's Retirement Muddles Financial Overhaul.”
As it happens, the announcement really did create a muddle, since it raised two separate questions that are easy to confuse: 1) Does Dodd’s looming retirement make a so-called reg reform bill more likely to pass this year? 2) If a bill does pass, will it be tougher or weaker than it would have been if Dodd were running for re-election? The problem is that the Journal piece only added to the confusion by providing answers that suspiciously benefit reform opponents. It’s as though the Journal was trying to construct a narrative that could derail the Democratic agenda. And it’s not the only time it’s happened lately.
But back to Dodd for the moment. On the first question--is a bill more likely to pass?--the answer is almost certainly yes. On the one hand, Dodd, who faced an uphill re-election fight thanks to his perceived closeness to the financial industry, no longer has the same political incentive to demonstrate his anti-Wall Street bona fides. On the other hand, Republicans were in no mood to give Dodd a victory in the middle of a tough re-election fight. It’s unlikely they’d have played ball even if Dodd wanted to. Now, one would expect them to ease up a bit.
Most of the coverage of Dodd’s retirement reflected this conclusion--like the pieces that ran in The Washington Post and on the Associated Press. But the Journal story suggested a reg reform bill would now be less likely. “With the party's political difficulties increasing,” the paper observed, “its appetite for controversial legislation, already weak in an election year, has shrunk even further.”
As for the second question--will a bill, if it passes, be tougher or softer?--that’s much harder to say. For one thing, Dodd would have had to compromise significantly in order to pass a bill even if he were running for re-election. (There’s no way the hard-nosed bill he authored could get 60 votes in the Senate.) Relative to that baseline, one could imagine the bill getting even more industry-friendly--maybe Dodd was posturing and was never as hawkish as his original bill suggested. But one could also imagine the final bill ending up tougher than it would have. After all, Dodd no longer has to worry about raising money from Wall Street for his re-election campaign. And for both personal and biographical reasons--which my colleague Suzy Khimm enumerated in this great piece--Dodd seems keen to bolster his legacy and redeem his personal reputation, which took a hit after he received a special mortgage deal from Countrywide Financial. (Dodd says he wasn’t aware that the terms of the mortgage were preferential.)
The point is that, depending on how you (or, more importantly, Dodd), weight these considerations, the second question could go either way. Once again, most of the coverage reflected that uncertainty. For example, the AP noted that Dodd was now free to “cut a deal with Republicans without fear of alienating liberal voters” (a tug rightward) but also freer from “the influence of financial sector executives and hedge fund managers who have regularly filled [his] campaign treasury with donations” (a tug leftward).
The Journal, on the other hand, framed its account with a quote from a former Republican Senate aide now at the libertarian Cato Institute: “If Dodd still wants a bill, he can get one; he just has to compromise much more than he would have had to before." The other sourcing for this claim came from unnamed financial executives, who argued that “any legislation that passes will likely be more industry-friendly than what was under consideration even a few weeks ago.”
But, of course, all these people have an interest in creating the impression that Democrats must compromise further. By contrast, liberal activists quoted in other publications express optimism that Dodd’s looming retirement will make the bill tougher than it would have been. As Ed Mierzwinski of the U.S. Public Interest Research Group told The Washington Post, “I think it could play to our advantage. … My guess is he's worried more about his legacy than he is about making compromises." (For what it’s worth, two senior Democratic Senate aides told me the same thing.) Nowhere does the Journal allow for this possibility.
Let me say for the record that I think the writer of the Journal piece, Damian Paletta, is absolutely first rate. I’ve closely followed his coverage of government policy toward banks this last year and found it consistently on target and ahead of the curve. The flaws in the piece strike me as a function of editing, not reporting. The piece has the whiff of an editorial intervention intended to advance the storyline that reg reform is moribund and Democrats are in disarray. (The Journal didn’t respond to my request for comment.) Lines like the following read as though they were inserted by an editor late in the process: “More broadly, Mr. Dodd's retirement, combined with an almost simultaneous similar announcement from Democratic North Dakota Sen. Byron Dorgan, makes it almost certain that struggling legislative initiatives … are off the table this year.” And, of course, analytical pieces are much more susceptible to this kind of funny-business than straight news stories, since it’s hard for a writer to prove an editor's political judgment objectively wrong.
Unfortunately, it’s the kind of thing that’s been going on more and more at the Journal since its 2007 purchase by Rupert Murdoch’s News Corp. Last August, the paper published a well-reported piece about Barack Obama’s management style by two top-notch staff writers, Jonathan Weisman and Neil King Jr. On balance, the reporting cast Obama in a flattering light: as a president eager to immerse himself in the information necessary to make important decisions. But the headline and framing of the piece were strangely dissonant--suggesting Obama’s appetite for information made him a Jimmy Carter-esque “micromanager.” (Click here for my original take.) It felt like an editor was determined to superimpose this theme regardless of what the reporting turned up.
In a terrific piece about the Journal last month, New York Times media columnist David Carr finally shed some light on the situation. A little over a year ago, Robert Thomson, the conservative British journalist Murdoch brought in to run the paper, hired Gerard Baker, a fellow British conservative and veteran U.S.-based reporter, to be his deputy. Together, Thomson and Baker have consciously tilted the Journal’s Washington coverage rightward, according to the multiple current and former staffers Carr interviewed. Carr noted, among other things, the way a recent news story used the right-wing propaganda term “death tax” to refer to the estate tax, and the late addition of a derisive Rush Limbaugh quote in the paper’s Ted Kennedy obituary. (Disclosure: The Journal approached me in 2008 about a job in its Washington Bureau. I discussed the idea with some editors there, but the conversation petered out after a while.)
Toward the end of his piece, Carr paraphrased a Journal reporter who told him the paper “ended up looking out of step with other coverage because an agenda may have been at work.” The Dodd retirement piece was a telling example.
In fairness, some of the paper’s recent changes are refreshing--in many ways, it’s become snappier and more engaging. And most people can spot blatant signs of a political agenda--“death tax” and Limbaugh quotes--which renders them benign or even counterproductive. The problem in this case is that the dynamics of reg reform are extremely complicated, and even sophisticated readers rely on a publication like the Journal to translate for them. If the Journal’s top editors are distorting that coverage in subtle but meaningful ways, it could actually change the outcome of the debate. Which, I guess, is really the point.