U.S. Senator William Proxmire; courtesy of the Library of Congress
William Proxmire was first elected as a Democrat from Wisconsin to fill the vacated seat of U.S. Senator Joseph McCarthy in 1957. He served as U.S. Senator until 1989, and as Chairman of the Senate Committee on Banking, Housing and Urban Affairs from 1975 to 1981, and again from 1987 to 1989. He established the record for casting 10,261 consecutive roll call votes from April 1966 to October 1988. Widely regarded as a political maverick, he campaigned against government waste, abuse and bureaucratic mismanagement. In his last two campaigns, he accepted no campaign contributions, spending less than $200 getting re-elected. 8
Consistent with his outside-the-Beltway persona, Senator Proxmire became a national watchdog over the financial services industry. He advocated regulations on banks and lending agencies, including requiring clear and complete disclosure of lending rates and terms for consumers. He promoted legislation that would modernize the banking system, but sought protections against potential abuses by large banks of individual depositors and public funds.
When the issue of permitting banks to expand services into non-traditional banking areas arose, as proposed with the repeal of Glass-Steagall, Proxmire raised concerns. He argued that the repeal “invites an end to the foundation of financial law that has served this country so well for several hundred years. That foundation is the separation of banking and commerce.” 9 Proxmire proved a thorn in the side to legislators pushing for “financial modernization” precisely because he was concerned about what he saw as the likely deleterious effects of permitting banks to market securities and expand their business into other non-traditional areas.
Senator Proxmire was also a strong advocate for investor concerns. When the insider trading scandals raised concerns about risk arbitragers in 1987, Proxmire wrote SEC Chairman John Shad requesting additional information. The SEC Office of the Chief Economist had just published its report on “Stock Trading Before the Announcement of Tender Offers.” Proxmire requested Shad provide information on successful tender offers, with a “detailed breakdown of the pre-announcement purchases by the arbitrage department of each of the investment banks” involved in the transactions, and expressing concern that the “spreading view of our markets is that certain market participants may not be playing according to the rules.” 10
Senator Proxmire represented a legislative backstop to the broad range of financial services “reformers” promoting legislative expansion of services sought by the financial services industry. Particularly with respect to efforts to erode the separation of banking and commerce established in Glass-Steagall, Proxmire took every opportunity to advocate for that separation, because he felt that the New Deal-era Act encouraged safe and conservative banking, protected investors and depositors, and promoted the overall economic well-being of medium and small business and the middle class, which he considered his primary constituency in Wisconsin. His tireless efforts created numerous obstacles to reform proponents and industry special interests seeking expansive new powers for large national banks.
(8) December 16, 2005 Richard Severo, “William Proxmire, Maverick Democratic Senator from Wisconsin, Dead at 90,” The New York Times.
(9) March 26, 1987 Statement of U.S. Senator William Proxmire in opposition to a clean FSLIC bill.
