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Union leaders take credit for Sen. Lincoln’s derivatives provision

by Kevin Bogardus - 05/18/10 7:37 PM ET

Unions are claiming credit for Sen. Blanche Lincoln’s (D-Ark.) tough
derivatives bill, saying their support for her primary challenger pushed
her to the left.

But even though it backs the legislation, the labor movement is unlikely to do the same for the incumbent senator even if she defeats Democratic opponent Bill Halter, Arkansas’s lieutenant governor.

Arkansas voters headed to the polls Tuesday to decide who will carry the Democratic banner this fall. Neither candidate is expected to garner more than 50 percent of the vote, leading to a likely runoff June 8.

Labor groups have been infuriated by Lincoln’s opposition to the Employee Free Choice Act — which would make union organizing much easier — as well as her vote against confirming labor board nominee Craig Becker, who later won a recess appointment. Unions were eager to mobilize against Lincoln once Halter jumped into the race.

As the primary heated up, the Senate began to move on its Wall Street reform bill. Lincoln surprised many when she introduced a tough derivatives amendment. As chairwoman of the Senate Agriculture Committee, she has jurisdiction over the issue, and her panel was at the time heavily lobbied by the banks.

Union leaders are now saying that, without their support of Halter, Lincoln wouldn’t have been so strong on derivatives.

“Absolutely, 100 percent guaranteed,” Eddie Vale, an AFL-CIO spokesman, said in an e-mail. “Up until 24 hours before she revealed her intentions everyone thought she was going to weaken the bill significantly [and it] was only stronger because of the primary. However, the real question is will she fight for her bill or is it just an election ploy and she will let it be watered down.”

Lori Lodes, spokeswoman for the Service Employees International Union (SEIU), made the same assessment.

“Without that challenge, there is very little in her record to indicate she would have ever been as strong on derivatives. We will have to see tomorrow where her commitment is to this derivatives language,” she said.

A spokeswoman for Lincoln dismissed the charges, saying the senator is defending small businesses from Wall Street risk-taking with her bill.

“The fact it’s an election year shouldn’t prevent her from doing the people’s business,” said Katie Laning Niebaum.

Lincoln’s amendment would force banks to spin-off their derivatives operations, which could lead to losses of billions of dollars in revenue.

Several high-profile Obama administration officials, such as Federal Deposit Insurance Corporation Chairwoman Sheila Bair, Federal Reserve Chairman Ben Bernanke and White House financial adviser and former Fed Chairman Paul Volcker, have come out against the measure. Critics say the measure could mean less regulation for derivatives operations or force them to move to financial firms overseas.

But the measure has won strong backing from unions. A May 3 letter to senators from Americans for Financial Reform expressed “strong support” for the Lincoln derivatives legislation, saying it ensures “the American taxpayer is not the banker of last resort” for the “casino-like investments” of Wall Street. Both the AFL-CIO and SEIU are members of the organization.

Still, unions have not relented in painting Lincoln as a Wall Street insider. Labor officials have highlighted her campaign contributions from Goldman Sachs employees and run television ads assailing her 2008 vote for the $700 billion Wall Street bailout.

“We do like the bill so we hope that she continues to fight for it as just as hard,” Lodes said. “One shift in her position does not make up for an entire record for fighting for Wall Street.”

SEIU said it will not support Lincoln in a general election bid.

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“Our concern remains that she is not going to stand up for working families. Her record proves that and her campaign rhetoric has taken it to a whole new level,” Lodes said.

The AFL-CIO hasn’t made its intentions in the November race clear.

“We are focused on doing [get-out-the-vote efforts] today and then the runoff to elect Halter. When it’s time for general election decisions they will be made by the Arkansas State Federation,” Vale said.