WASHINGTON — Banking policy has been largely absent from the two first Democratic presidential debates. But that could change when former Vice President Joe Biden and Sen. Elizabeth Warren — two leading candidates with a history of clashing over consumer lending issues — meet on stage for the first time.
Analysts will be watching whether Warren lays into Biden over his past ties to the credit card industry and support for the 2005 bankruptcy reform law that the Massachusetts senator says unfairly hurt working families.
“I’m sure she will question if Biden is too close to Wall Street,” said Jaret Seiberg, a policy analyst with Cowen Washington Research Group.
The two avoided each other in the first two debates over the summer. Both times, the slate of roughly 20 candidates was spread out over two nights, with Biden and Warren appearing on separate panels.
But with only 10 candidates qualifying for Thursday night’s debate in Houston, the stage will include Biden, Warren and Vermont Sen. Bernie Sanders — the three candidates at the top of the polls.
Their appearance together will present a visible contrast between different approaches to financial policy within the Democratic field. In the past, Biden, who leads the primary polls, has taken positions aligned with a moderate vision of the banking industry. Warren and Sanders articulate a sharper criticism of large financial institutions.
“I think Warren is going to outline her aggressive plan on going after too big to fail financial institutions and Wall Street in general,” said Seiberg.
The debate could shine a spotlight in particular on two subjects that have divided Warren and Biden in the past: bankruptcy and the credit card industry.
As a senator from Delaware, Biden advocated for a 2005 industry-backed bill aimed at preventing consumers from abusing the bankruptcy system. Warren vehemently opposed the bill, saying that it would hurt indebted consumers.
Biden also has a history of accepting cash from the credit card industry. His single largest contributor as a senator was the credit card issuer MBNA Corp., which was later folded into Bank of America. On the campaign trail, Warren has already chided Biden for being “on the side of the credit card companies.”
But some observers say the credit card issue may not resonate with voters.
“He was a senator from Delaware,” said Charles Gabriel, president of Capital Alpha Partners. “It’s very much a part of the state’s economics. … For years most of the credit card companies were in Delaware.”
Brandon Barford, a policy analyst with Beacon Policy Advisors, said criticism of Biden’s positions on bankruptcy reform could more easily translate with the general public.
“It makes much more sense to focus on the bankruptcy angle because it would reach much more people,” said Barford. “Because credit cards haven’t been a big focus in the past few years, I think it’s less likely that she will go after him for that.”
Barford noted that Warren could tie bankruptcy reform to student loans.
“Biden’s bankruptcy bill made it nearly impossible for private student loan borrowers to declare bankruptcy and get their loans discharged, in addition to making it harder for everyone to do so for every class of loan,” Barford said.
In May, Warren co-sponsored legislation to eliminate the section of the bankruptcy code that restricts debtors’ ability to discharge private and federal student loans.
Warren has also proposed canceling up to $50,000 in student debt for borrowers from families with incomes below $100,000, as well as the cancellation of a portion of student loan debt for borrowers from families with incomes below $250,000. The debt writeoffs would largely be funded by a wealth tax.
Seiberg said that any potential attacks on Biden’s support for the 2005 bankruptcy bill are likely an effort to appeal to the progressive base of the party.
“I would expect the consumer bankruptcy reform to be a way to needle Biden and to argue that he is not progressive enough,” Seiberg said. “We have a lot fewer moderates today so it is easier to vilify that law and associate it with the former vice president. I think Biden’s biggest exposure is the argument that he has not been progressive enough throughout his career.”
But with all the criticism Biden could get for his more moderate stances on the financial industry, some say he could easily quell those concerns by touting his effort to push through the 2010 Dodd-Frank Act reforms.
“Biden’s best act would be to keep the discussion of financial services very broad, and if forced to defend being too supportive of the industry in the past, point to the fact that it was the Obama administration that re-regulated banks and Wall Street, via Dodd-Frank, after Republicans had turned a blind eye to practices that hurt American consumers,” Gabriel said.
Seiberg added that Biden helped create the Consumer Financial Protection Bureau, which is largely considered to be the brainchild of Warren.
“I think his response is, ‘I helped get the CFPB which, Elizabeth, was your big idea,’” Seiberg said. “I made that happen. I worked the halls of Congress so we could have this regulator put in place.”
Like Warren, Sanders has also been a vocal critic of Wall Street and is ideologically aligned with Warren on most economic policy issues.
But analysts say it may not be the best strategy for Sanders to attack Biden on that topic with Warren on the same stage.
“If I’m Bernie, I wouldn’t choose those topics as the ones to go after Biden about,” Barford said. “If I’m Warren … it’s part of her narrative on how she became a Democrat, and then a candidate, and then a member [of the Senate]. It’s part of her formation story as a politician.”