DENVER — Lawmakers gathered here for the Democratic National Convention claim electing Sen. Barack Obama president would produce smarter, more sensible financial services policies that would quiet and strengthen a troubled market.
A range of House and Senate members said in interviews that the Illinois Democrat, who is scheduled to officially accept his party's nomination tonight, would take a pragmatic approach in pushing for changes and in making regulatory appointments.
"We are going to work together and I've talked to him," said House Financial Services Committee Chairman Barney Frank. "He supports the kind of market-friendly regulation we're talking about."
Rep. Rahm Emanuel, the House Democratic Caucus chairman, said he would expect significant changes to the regulatory structure under a President Obama.
"There is going to be reform and there should be reform, because what's in place didn't work," Rep. Emanuel said. "More transparency, more accountability, so we don't have this opaqueness where nobody knows who owns what and where the bottom is."
In particular, Sen. Obama's commitment to tighten regulation of mortgage lenders would improve stability in the housing sector, lawmakers said.
"With Obama I am sure there will be more oversight," said Rep. Charlie Wilson, D-Ohio, a member of the House Financial Services Committee and a former banker. "We won't have people who are not licensed making mortgage loans. We won't have the situation we have had in the past where people are just getting random people to do appraisals for them."
The lawmakers sought to dispel fears that an Obama administration would make radical changes.
"I believe that Obama would bring some common-sense regulation and bankers would appreciate that," said Rep. Wilson, a former chairman of Belmont National Bank in Saint Clairesville, Ohio.
Many in the industry say it would be put on the defensive if Sen. Obama wins in November. Of particular concern are suggested reforms to credit card practices and bankruptcy law.
The Democratic platform says judges should be able to rework mortgages in bankruptcy proceedings, and it calls for a rating system to provide consumers with more information on their card features — two ideas Sen. Obama has championed.
Several lawmakers said the industry should not panic.
"Knowing bankers, they will always fear potential challenges and they always err in thinking the worst," said Rep. Paul Kanjorski, the No. 2 Democrat on the House Financial Services Committee. "I would challenge that. Barney and I, campaigning in '06, told the business community and the banking community that they do not have to fear a Democratic majority in Congress, and I think that in any evaluation of our first years as a majority in Congress, our predictions were true."
The committee has "been more responsive to the needs of the business community than the old majority — Republicans — were, so I think it's the same thing with the presidency," Rep. Kanjorski said. "They will be pleasantly surprised."
Rep. Gregory Meeks, a New York Financial Services Committee Democrat, agreed Sen. Obama was pro-business.
"If you look at what Sen. Obama has done in the past," Rep. Meeks said, "he's not into over regulating. He will also look to make sure we can stay competitive and compete in markets overseas, and that's a great opportunity for America."
A President Obama would bring in a new team of economic advisers and replace most of the regulators, lawmakers said. Judging from the candidate's current slate of advisers, Rep. Kanjorski said he was confident Sen. Obama would do a better job than the Bush administration has in handling the troubled housing markets.
"Looking around at who is on his advisory team, I'm awfully optimistic that he's really going to capture an economic policy that will invigorate our system and it's going to be rather bipartisan," the Pennsylvania Democrat said. "I have particular admiration for the advisory team he's put together."
Asked to name a few, Rep. Kanjorski noted former Treasury Secretary Robert Rubin, former Comptroller of the Currency Eugene Ludwig, and former Bush Treasury Secretary Paul O'Neill. Sen. Obama's economic advisory team also includes Larry Summers, another former Treasury secretary, and Austan Goolsbee, a University of Chicago professor.
"They come from different parties and have different philosophies, but they have one thing in common: they are pragmatic," Rep. Kanjorski said.
"Obama will be much more pragmatic than" his opponent, Sen. John McCain, R-Ariz. "He's surrounded by economic excellence. He'll have a first-rate alternative set of series of things we can do depending upon what happens with the economy."
It is not clear who might stay on in an Obama administration. But so far Federal Reserve Board Chairman Ben Bernanke appears safe. Asked if the central bank chief should be replaced, Rep. Frank said no.
"I think Bernanke has done a good job responding to events, so certainly my recommendation would be to keep him on," he said.
He was echoed by Rep. Brad Miller, D-N.C., a House Financial Services Committee member, who said Mr. Bernanke "has done a pretty good job and he inherited this mess."
"He's done a lot to reach out to Democrats," Rep. Miller said. "I've got a list of people I think Obama needs to fire … and Ben Bernanke is not one of them."
(By law, the president cannot summarily fire a Fed chairman. However, a President Obama could choose not to reappoint Mr. Bernanke when his term expires in 2010.)
With Democrats likely to retain control of both chambers of Congress next year, there are some who argue that the presidential race would not have a significant impact. Lawmakers here clearly disagree.
"The difference in who you have as president is dramatic," Rep. Miller said.
"Almost everything I've worked on in the Congress could be done like that," he said, snapping his fingers, "by the president proposing rules. … It makes a huge impact, and in pushing the policy, a president has advantages that are just hard to understate."
Rep. Miller said the influence a president can have on public policy hit home when he was attending an event in Greensboro this year.
A state legislator in his district brought up the bankruptcy reform bill that Rep. Miller introduced and that Sen. Obama has endorsed; the state lawmaker enthusiastically described it as Sen. Obama's idea and asked Rep. Miller if he would support it.
"On the outside, I said 'Well, yes, as a matter of fact I'm the principal House sponsor of that bill.' On the inside I thought, 'Barack Obama's idea — my ass,' " Rep. Miller said. "But it reminded me how huge the president's megaphone is. This is a state legislator in my district. This is one of the things that I've worked the most on in Congress and he had no idea."
Lawmakers also drew contrasts between Sen. Obama and Sen. McCain, who differs in style from President Bush but, they said, is likely to push forward the same priorities.
"Part of the problem with the Republican side and McCain — they are exhausted," Rep. Kanjorski said. "They are sort of hurting, straining for new thoughts. And because the McCain people will have to follow the regular Republican ideology, I don't think they'll attract much support in the Congress. In perilous times like we have now where you have instability and potential catastrophe, what has happened is there has been a failure of ideological approaches."
Rep. Wilson added that "one of the reasons we are in the situation we are in now is because the Bush-McCain way of governing has not had any oversight."
Rep. Frank said he was convinced a President McCain would take much of his advice from former Sen. Phil Gramm, who resigned as an economic adviser to the Arizona Republican after publicly saying the United States had become "a nation of whiners."
Rep. Frank said Mr. Gramm's influence would turn his own set of priorities on its head.
"McCain's chief economic adviser is still Phil Gramm; he's kind of the antithesis," Rep. Frank said.
"Phil is really on the opposite end of the spectrum. He's one of the very ardent deregulators and we have sharp differences," Rep. Frank said.
Regulatory restructuring, the next long-range topic in financial services matters, is an example of where Rep. Frank said he does not trust Mr. Gramm's point of view.
"One issue, you extend some kind of supervision to the investment banks. That's what Ben Bernanke just said. That's the total antithesis to what was done in Gramm-Leach-Bliley, which made sure they could get into business without that," Rep. Frank said.
Not every lawmaker was so negative. Rep. Dennis Moore, the policy chairman at the Blue Dog coalition, a group of Democrats who support balancing the budget, said he had "great respect for John McCain."
But he said Sen. Obama was still the better choice.
"Obama would work closer with us on some financial services issues," Rep. Moore said.
Initially it was thought that the economic environment and housing downturn favored Sen. Obama's chances and those of other Democrats, but the outcome remains too close to call. Rep. Kanjorski, for example, is in the fight of his life to get re-elected this fall against a challenger who has distinguished himself as tough on immigration.
During an appearance at a financial literacy event sponsored by the Financial Services Roundtable at Mile High Station, Rep. Kanjorski sought out Sen. Tom Harkin of Iowa to tell him of his difficult circumstances. Sen. Harkin promised to do what he could to help.
Though he is focused on his own race, Rep. Kanjorski said he is hopeful of Sen. Obama's chances.
"I'm sort of optimistic from a political standpoint that Obama will be the next president," he said.
