Who Shapes Institutional Reform: A Process-Tracing Approach to the Politics of Financial Reform in the United States, 2008-2010

This paper takes a comparative view of the politics of financial reform in the United States.  It examines the presidential initiatives and Congressional negotiations that shaped the Dodd-Frank legislation of 2010.  Most studies of U.S. public policy emphasize the role of well-organized interest groups and their links to Congressional committees.  By contrast, this paper illuminates the significance of grass-roots advocacy organizations and the unexpected interest-group coalitions that qualified the power of established actors.  By tracing communications between interest-groups and political figures through the legislative process – from presidential initiative, preliminary Congressional jockeying, the drafting of the House version of the law, the reopening of debate in the U.S. Senate, and the harmonization of the House and Senate versions – this paper shows that a delicate bridging operation occurred.  Congressional Republicans and Democrats alike had to stitch together a two-tiered coalition to connect populist reactions to elite-led proposals for moderate reform actions.  The analysis supports the standard view of the U.S. policy process as unusually “porous” to societal interests, but qualifies the conventional view of U.S. regulation as dominated exclusively by established industry interests.  There is a limited but decisive place for new grass-roots efforts to change the status quo in U.S. regulatory policy.