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Celebrating Sen. Ted Kaufman, Accidental Leader

Sen. Ted Kaufman has emerged as one of the Senate's fiercest critics of Wall Street and a champion of the need to push for a serious rebooting of our financial system.
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At a time when our political and financial landscapes are littered with villains and those unwilling to take them on, it's refreshing to find someone in the halls of power that we can unabashedly celebrate.

Enter Sen. Ted Kaufman of Delaware. Kaufman, Joe Biden's longtime chief of staff who was appointed to serve out his old boss's term, was originally thought to be a Senate placeholder.

But, far from biding his time, Kaufman has emerged as one of the Senate's fiercest critics of Wall Street and a champion of the need to push for a serious rebooting of our financial system.

When I met with Kaufman earlier today in his small, basement "hideaway" in the Capitol ("it took Sen. Biden 15 years to get one of these; I was lucky to get one right away"), the first thing I wanted to know was what had inspired his transformation from behind-the-scenes staffer to fire-breathing accidental leader. Was there a Road to Damascus moment?

"In the beginning," he told me, "though I was very upset about what had happened on Wall Street, it wasn't one of my key objectives. In fact, the committees I got on were Foreign Affairs and Judiciary. But then I started reading more and more about the way the SEC was failing to curb abusive practices when it came to short selling. So I started speaking out on that... and the blogosphere really got involved, reporting what I was saying. Then people started reaching out to me: 'You think this is bad about short selling, you ought to take a look at this'... or 'you ought to take a look at that!' So we started getting all this information, and then checking it out with academics, folks from the industry, we just started building this whole repository of things that were still going on as if nothing bad had ever happened."

Kaufman, who turned 71 on Monday, has a very unusual resume for a senator. He earned an engineering degree from Duke, followed by an MBA from Wharton. He then worked at DuPont before shifting his focus to government, working as Biden's chief of staff from 1976 to 1995.

The first piece of financial reform legislation he cosponsored, along with Sens. Patrick Leahy and Chuck Grassley, gave federal prosecutors combating financial fraud more power. President Obama signed the bill into law last May.

Since then, Kaufman has immersed himself in the often byzantine battles over financial regulation -- and watched as financial reform has been watered-down and lobbied within an inch of its life.

Frustrated, Kaufman has moved to the forefront of those willing to stand up and demand real change. While far too many of his Senate colleagues tinker around the edges of our broken financial system, creating what Kaufman has derided as "compromise measures that give only the illusion of change and a false sense of accomplishment," Kaufman is fighting to create a financial infrastructure that will protect us from having another financial meltdown.

In the last week alone, Kaufman has taken to the Senate floor to deliver two major -- and blistering -- speeches. The first was a masterful overview, offering chapter and verse on what led to the financial crisis and what, specifically, needs to be done to ensure that we "build a regulatory system that will endure for generations instead of one that will be laid bare by an even bigger crisis in perhaps just a few years or a decade's time."

Kaufman quite simply wants to put an end to "too big to fail" banks: "We need to break up these institutions before they fail, not stand by with a plan waiting to catch them when they do fail."

He believes strongly in the need for a "Glass-Steagall for the 21st century," the need to radically clean up the over-the-counter derivatives market, the need to make the shadow banking world far more transparent, and the need to better address "the fundamental conflicts of interest on Wall Street" that lead to securities fraud. Kaufman, looking very Lincoln-esque with his long, thin face and lanky build, doesn't mince words.

"Individuals at Enron, Merrill Lynch, and Arthur Andersen were called to account for their participation in fraudulent activities," said Kaufman. "But it is quite possible that no one will be held to account, either in terms of criminal or civil penalties, due to the deception and misrepresentation manifest in our most recent credit cycle."

Monday, on his 71st birthday, Kaufman took to the Senate floor to lambast the loss of the rule of law on Wall Street -- his outrage sparked by the damning report from the bankruptcy examiner for Lehman Brothers.

He reminded his colleagues that the American taxpayer has laid out over $2.5 trillion to "save the system," and asked: "What exactly did we save?" His answer: "a system of overwhelming and concentrated financial power that has become dangerous... a system in which the rule of law has broken yet again."

After saying that he was "concerned that the revelations about Lehman Brothers are just the tip of the iceberg," he explained the overarching reason reform is essential:

"At the end of the day, this is a test of whether we have one justice system in this country or two. If we don't treat a Wall Street firm that defrauded investors of millions of dollars the same way we treat someone who stole $500 from a cash register, then how can we expect our citizens to have faith in the rule of law?... Our markets can only flourish when Americans again trust that they are fair, transparent, and accountable."

The great thing about Kaufman is that he isn't afraid to use direct, pointed language, saying that "fraud and lawlessness were key ingredients" in the financial collapse. And he's willing to name names: in his attack on derivatives, he called out Alan Greenspan, Robert Rubin, and Larry Summers as key cheerleaders for unregulated derivatives markets.

Contrast that with Tim Geithner who, during his interview with Rachel Maddow this week, not once, not twice, but three times ascribed the financial crisis to a "failure of government." One time it was "an outrageous failure of government." The next it was "a tragic failure of government." The third, it was "a terrible failure of government." But before it was failure of government -- i.e. of regulations -- wasn't it an outrageous, tragic, and terrible failure of Wall Street?

Spending time with Sen. Kaufman, and witnessing his passion and determination to fix the system, I asked myself: What conditions helped turn him into a fearless crusader? And how do we get more like him?

Leaving aside his personal character and wisdom, which we cannot duplicate, there is one very big condition we can: The absence of money as a factor in our leaders' decision making. Kaufman didn't need to raise any money to become a senator -- he was appointed. And he doesn't need to raise any money for his reelection campaign -- he's not running.

At 71, with a long, distinguished career in government under his belt, Kaufman is completely unencumbered by the need to curry favor and approach moneyed interests with his hat in his hand.

So let's all take a good look at Ted Kaufman. This is what it looks like when our representatives are not beholden to special interests, and are only serving the public interest.

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