Among the thousands of people shivering through President Barack Obama's inauguration a year ago, Senators Mark Warner (D-Va.) and Robert Corker (R-Tenn.) happened to sit next to each other, and their bone-chilling time together yielded something rare in Washington: genuine bipartisan warmth. "He and I just kind of hit it off," says Warner. It turns out the two ex-businessmen had a bond. "We could both read a balance sheet," Warner recalls.
There's plenty that separates the first-term senators. They clash on everything from health reform to abortion to organized labor. But the friendship forged on Inauguration Day could pay dividends on financial regulation. Warner and Corker, both members of the Senate Banking Committee, are working across party lines on a compromise on one crucial aspect of the effort to strengthen the federal government's ability to stave off another Wall Street crisis.
Their collaboration contrasts with congressional acrimony on health care and other topics. "The word from the Republican leadership is for the most part: Don't cooperate on Obama's agenda," says Thomas Mann, a political analyst at the Brookings Institution. The Banking panel "is the only place in the entire Congress where Democrats and Republicans are actually talking together."
Corker and Warner characterize themselves as pragmatists shaped by entrepreneurial success. They are two of the 10 wealthiest members of the Senate, according to the Center for Responsive Politics, a Washington research group. Warner, who headed a technology venture capital firm before getting into politics, has an estimated net worth of $210 million. Corker made his mark in construction and has an estimated $52 million. Both have served as government executives as well: Warner as governor of Virginia, Corker as mayor of Chattanooga.
The pair differs as much in appearance and demeanor as in politics. Warner, 55, stands 6-feet 2-inches and speaks with boyish enthusiasm. Corker, 57, is 5-feet 7-inches, favors well-cut suits, and likes to grill witnesses at hearings in a loud Tennessee-tinged voice.
Behind the scenes, they work effectively—for example, by hosting a periodic bipartisan salon where senators and staff confer privately with financial experts. "The lobbyists aren't there. The media isn't there. They can talk more openly," says FDIC Chairman Sheila Bair, who has briefed lawmakers at a Corker-Warner session. "If a member wants me to explain what a CDO is for him, there's no reason to be embarrassed." Members of Congress typically seek counsel from outsiders individually or through their party caucuses.
Now, at the request of retiring Banking Committee Chairman Chris Dodd, Corker and Warner are one of four bipartisan teams of bank panel members drafting parts of the Senate's version of regulatory reform legislation. The House passed its legislation on the topic last year; the two approaches differ on such issues as whether to have a single bank regulator and will have to be reconciled.
A COMPROMISE PLAN
Corker and Warner are focusing on how federal officials should oversee giant financial institutions. Some Democrats and regulators such as Bair think executive branch officials should have greater authority to wind down large financial companies, including those that aren't banks. Republicans prefer that failing firms be forced into conventional bankruptcy proceedings.
Corker and Warner are drafting a compromise that would create a new financially expert bankruptcy court. That body, rather than an executive-branch agency, would have the power to dismantle a faltering financial institution. The court would be led by judges trained to deal with highly complex companies that have seized up and threaten the stability of the financial system, according to people familiar with the proposal. The compromise plan would allow regulators to intervene in the legal proceedings to take control of the failing institution's wind-down—and lower expectations of future government bailouts.
The idea faces opposition from some Democrats and regulators, including Bair's FDIC, which now presides over workouts of failed banks. Even Corker and Warner's own banking staffers were uneasy about cooperating with the other side—at least until the two senators arranged a drinking session at Johnny's Half Shell near the Capitol. If only all bipartisanship came at happy-hour prices.