During a meeting with consumer advocates in Washington in July 2010, Vice President Joe Biden lauded the Obama administration’s progress on reforms it had long sought while offering pointed words about the practices of lenders and banks.
“Credit-card companies,” Biden said, “can’t continue to trap consumers with hidden fees or retroactive rate increases.”
Not mentioned were Biden’s own history with the financial services industry, an economic power in his home state of Delaware, or the critics who saw him as too close to credit-card companies in more than three decades in the Senate.
But if Biden decides to run for the Democratic presidential nomination, his Senate reputation as a friend to financial institutions could be a significant obstacle, especially if he wants to make inroads with the party’s liberal base, which has become increasingly skeptical and often passionately hostile to anything connected to Wall Street.
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When you are a senator from a state with a lot of credit-card and financial interests, you have a different constituency than when you are vice president.
Jared Bernstein, who served as Biden’s chief economist and economic adviser during his first term
Biden’s meeting Aug. 22 with Sen. Elizabeth Warren, D-Mass., suggested that his ability to attract some of the populist energy that Warren has generated – and that now fuels the candidacy of Sen. Bernie Sanders of Vermont – is a major consideration as he and his advisers continue to discuss whether he should run. A decision is expected within a month.
Warren has been highly critical of financial companies, and challenged politicians, including Biden, whom she believes have done their bidding.
“Even vaguely opening his ears to Liz Warren” could endear him to activists, said Linda Sherry, director of national priorities for Consumer Action, a San Francisco-based advocacy group. “She is going to give him an earful because she certainly understands the harm that can come from ill-advised lending, and has been a critic of the credit-card industry.”
One of Biden’s likely priorities as a candidate would be to make a convincing argument that his approach to consumer issues has evolved since his time as a senator from Delaware. His friends and allies say that his record of support for financial services companies was inevitable given their importance in his home state, and that as vice president he has played a different role.
“When you are a senator from a state with a lot of credit-card and financial interests, you have a different constituency than when you are vice president,” said Jared Bernstein, who served as Biden’s chief economist and economic adviser during his first term.
In the late 1990s, the financial services industry began pushing for rules that would make it more difficult for consumers to seek bankruptcy protection. Biden was among those courted by the industry.
As vice president, Biden led the Middle Class Task Force, which sponsored the meeting five years ago on consumer protection issues. And prodded by the Obama administration, Congress passed legislation requiring clearer monthly statements and protecting against retroactive interest rate hikes, while limiting the fees that banks charge merchants on debit card purchases.
A spokesman for Biden, Stephen Spector, said the vice president’s efforts had “made the administration unparalleled in its support for financial reform and consumer protection.” Spector cited Biden’s support for the Credit Card Accountability, Responsibility and Disclosure Act, intended to protect consumers from unfair billing practices, and the Dodd-Frank Act, the 2010 financial overhaul legislation that provided new consumer safeguards and created the Consumer Financial Protection Bureau.
The extent to which Biden can share the credit for those bills could be significant in a primary campaign. “He was very much on the team, and back then it was extremely important that not only did we pass these measures, but that they were elevated for all to see,” Bernstein said.
Christopher Dodd, a former Democratic senator from Connecticut, said Biden, as vice president, was not necessarily a central player in the passage process, but has been a “classic progressive Democrat” on economic issues.
“As vice president, I certainly cannot think of a single instance that he was hostile,” said Dodd, a sponsor of the Dodd-Frank Act along with Barney Frank, a former Democratic congressman from Massachusetts.
Frank, who was chairman of the House Financial Services Committee, also did not recall Biden playing a significant role behind the scenes – for or against credit-card companies.
Still, Frank said, the Obama administration’s record on financial issues could be a “pretty good defense for Joe” against criticism of his earlier ties to the credit-card industry, before he was freed from representing the interests of his home state.
“A Biden presidency,” Frank said, “might more resemble an Obama presidency, at least on the credit-card industry.”
It is Biden’s record in the Senate, however, that poses a potential obstacle for his candidacy.
In the late 1990s, amid an increase in bankruptcy filings, the financial services industry began pushing for rules that would make it more difficult for consumers to seek bankruptcy protection. Among those courted by the industry was Biden, who represented the home state of a number of vested companies, including, at the time, the credit-card issuer MBNA Corp. (Charlotte-based Bank of America bought MBNA in 2006.) MBNA executives and employees contributed roughly $200,000 to Biden’s campaigns from 1989 to 2010, making the company his largest corporate donor during that time, according to data from the Center for Responsive Politics.
The bankruptcy debate went on for many years in Congress, with Biden on several occasions supporting the bill and ultimately, along with 73 others, voting for the version that passed the Senate in 2005. That legislation, which Barack Obama voted against, drew the ire of advocacy groups who saw it as anti-consumer.
At one point during the debate, Warren, then a Harvard professor, singled out Biden for what she saw as his anti-consumer role.
“The Senate was evenly split between the two parties, but one of the bill’s lead sponsors was Democratic powerhouse Joe Biden, and right behind him were plenty of other Democrats offering to help,” Warren wrote in her 2014 autobiography, “A Fighting Chance” “Never mind that the country was sunk in an ugly recession and millions of families were struggling – the banking industry pressed forward and Congress obliged.”
But looking back, Dodd, who also voted against the bankruptcy bill, said Biden had acted predictably. “My sense is that he was doing his job as a senator in a state where this isn’t a minor issue,” Dodd said.
Biden’s role in the bankruptcy debate and his ties to MNBA were immediately an issue for him after he was selected as Obama’s running mate in August 2008. A day after Biden was introduced as Obama’s choice, campaign aides acknowledged that Hunter Biden, his son, had a consulting arrangement with MBNA and that vetting the Bidens’ connections with the card issuer had been especially sensitive in picking him for the ticket. Biden played down the relationship at the time, telling NBC’s Tom Brokaw that there was nothing inappropriate about his ties to MBNA.
“Absolutely not,” Biden said, noting that the campaign donations from MBNA employees amounted to only 2 percent of the total he had received. And Biden stood by his work on the bankruptcy bill, saying he had blocked three earlier proposals favored by the credit card companies, and that to get his support, the bill “needed to put women and children first.”
As for his son’s work, Biden suggested that Hunter Biden, a recent Yale Law School graduate, had taken less to work for MBNA (at $100,000 a year) instead of a Wall Street bank (potentially $140,000 a year).
“He came home,” Biden said, “to work for a bank.”