Banking Law News

Warren Protege is Rookie to Watch on House Financial Services (1)

Jan. 18, 2019, 10:30 AMUpdated: Jan. 18, 2019, 3:04 PM

The House Financial Services Committee rookie to watch could prove to be Rep. Katherine Porter (D-Calif.), an experienced bank watchdog and protégé of Sen. Elizabeth Warren (D-Mass.)

Porter’s interest in consumer finance dates back to her time as a student in Warren’s Harvard Law School bankruptcy course. Like Warren, she also parlayed a career as a bankruptcy professor into a political post, eking out a narrow victory last November in historically Republican Orange County.

Porter also served as California’s compliance monitor for the 2012 national settlement on foreclosure abuses by major banks. Porter, along with headline-grabbing Rep. Alexandria Ocasio-Cortez (D-N.Y.), is one of 16 freshman Democrats joining the panel that oversees Wall Street.

“She’s not big profile, but she is very, very knowledgeable,” said Mehrsa Baradaran, a professor at the University of Georgia School of Law and author of How the Other Half Banks.

Porter is seen as bringing academic and analytical chops to the committee’s agenda. As a professor at the University of California-Irvine School of Law, Porter co-authored a 2018 study on the increase of older Americans falling into bankruptcy due to high healthcare costs and income instability. That expertise may come into play in the committee’s focus under Waters on housing finance reform and anti-redlining policies under the Community Reinvestment Act.

“She brings to Congress not only this incredible level of specialized knowledge as an academic who teaches in these areas, but also brings this body of research about how the economy and law really impacts the financial lives of most every day Americans,” Christopher Odinet, a professor at the University of Oklahoma College of Law, told Bloomberg Law.

In addition to Warren, Porter has another ally in Sen. Kamala Harris (D-Calif.) The former California attorney general appointed Porter to monitor up to $18 billion in relief promised to California borrowers under the 2012 settlement with five largest U.S. banks over robo-signing and other improper home foreclosure practices.

Mortgage lending remains a top priority for Porter as a lawmaker.

“I’m looking forward to prioritizing the issues that are important to help families in the 45th district, issues like holding Wall Street accountable, cracking down on predatory lending practices, and working to make housing more affordable,” Porter said in a Jan. 17 video tweet.

CFPB Oversight

Porter is also expected to add her voice to the committee’s plans to scrutinize the Consumer Financial Protection Bureau under the Trump administration, particularly policy and enforcement changes initiated under former Acting Director Mick Mulvaney, now acting White House chief of staff.

Porter is interested long-term in bold legislation focused on consumer protection, but is also looking for bipartisan opportunities on smaller, tailored bills, according to a Porter aide who spoke on background.

Any legislative work is likely to come from the standpoint that “people’s financial problems are actually legal problems,” Odinet said.

“I’m sure she’ll use her position on House Financial Services to shape financial law so that it helps people in how they deal with their financial lives,” Odinet said.

Revolving Door Out of Service?

Porter’s seat on the committee is part of a broader dynamic of allocating positions to new members of Congress whose campaigns relied on small-dollar donors and aren’t eyeing a career in financial services after their tenure, Baradaran said.

“She’s not doing this because she’s interested in the revolving door,” Baradaran said. “Because of the breadth and depth of her knowledge in finance, she’s not going to be easily swayed by some Citibank lobbyist handing her a bill and her not be able to say, This is bunk’,” she said.

To contact the reporter on this story: Lydia Beyoud in Washington at lbeyoud@bloomberglaw.com

To contact the editors responsible for this story: Michael Ferullo at mferullo@bloomberglaw.com; Seth Stern at sstern@bloomberglaw.com