Banks, Unions Are Big Ark. Losers
When incumbent Blanche Lincoln pulled off a 52%-48% upset last night, her opponent, Lt. Gov. Bill Halter, was only one of many losers. Some of the more obvious include those in the liberal wing of the Democratic Party who want more orthodoxy and loyalty, voters who want to throw out all incumbents and the scores of political pundits who predicted Lincoln was toast.
Labor unions, though, were the most obvious losers. They set out to make an example of Lincoln, who bucked their demands to support card check legislation, a more robust health care bill and other union priorities. Organized labor poured $10 million into the primary on Halter’s behalf, insisting it wanted to send a message to Democrats that they couldn’t take labor support for granted. In doing so labor leaders proved they don’t really understand the mood of the country and ended up ticking off Democratic moderates, President Obama and the party establishment that backed Lincoln.
They also “flushed $10 million of their members’ money down the toilet in a pointless exercise,” as one White House official told Politico. “If even half that total had been well-targeted and applied in key House races across this country, that could have made a real difference in November.”
But there was another big loser last night: Banks. They were fervently hoping for Lincoln’s defeat (but smart enough to stay in the background) because of her sponsorship of a key provision in the financial regulatory overhaul legislation. Lincoln, as chairman of the Senate Agriculture Committee, succeeded in getting the Senate to add language that would force big banks to shed most of their lucrative derivative business. The provision was important to Lincoln because it allowed her to campaign as someone willing to take on Wall Street, and some Democratic senators went along rather than undercut her in the middle of the primary campaign. Many figured they could quietly remove the prohibition in conference because the House version of the bill has no such provision and House Banking Chairman Barney Frank is skeptical of it.
But Lincoln’s victory gives new impetus to the provision. For one thing, it makes her a more powerful player in the negotiations beginning this week. And because it was popular with voters and effective in proving her anti-Wall Street credentials, it will make nervous Democrats think twice about axing it. Modifications are still likely, but some version of the plan is now a good possibility, much to the dismay of the big banks.
Lincoln’s victory last night is, of course, just a step in a very steep climb. She emerges from the process damaged and drained and is still an underdog in her November race against GOP Rep. John Boozman, who leads by as much as 20 percentage points in recent polls. But a Lincoln loss in November won’t provide much solace to labor unions and banks, which will be licking their wounds in the coming weeks.