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Elizabeth Warren fought Wall Street in last year's omnibus. This year it paid off.

Photo by Thos Robinson/Getty Images for Seven Squared Media

About a year ago today, Congress passed a government funding bill that contained a handful of policy riders including one that repealed Section 716 of the Dodd-Frank financial regulation bill. Elizabeth Warren took issue with that, and started an effort to blow up the compromise. At the time, this attracted a fair amount of derision from policy literalists who noted that Section 716 was not a particularly significant aspect of the overall financial regulation framework and it'd be a strange thing to shut the government down over.

But if you read today's Morning Money newsletter from Ben White at Politico you'll see that taking a stand over a small thing has paid substantial dividends for Warren and her allies (emphasis added):

Financial firm lobbyists are getting an earful from industry executives all over the country for failing to get much of anything into the omnibus (more on which from Zach Warmbrodt below). No big CFPB changes, no SIFI threshold changes, no DOL fiduciary rule slow-down. No nothing really. "We are hearing from some very disappointed and PO'd bankers," one lobbying group official emailed. Another in his DC office earlier this week: "We don't know what's in this thing but it doesn't look like good." The anger among bankers is understandable but the political reality is that slipping Wall Street (or even Main Street) banking riders into must-pass bills is a good way to kill those bills these days. The omnibus needs a hundred or so Democrats to get through the House and that just would not happen with any significant Dodd-Frank rollbacks.

The days of these measures slipping through unnoticed are simply over. One comment from Sen. Elizabeth Warren and it's off to the races. So while banking executives think many of the changes they are pushing are common sense relief that would benefit more than just their own bottom lines, most Democrats (and even many Republicans) simply don't see it that way. It's not so much a failure of the lobbyists (though they still get the incoming fire) as it is a complete shift in both the way the sausage gets made and the politics surrounding the banking industry. And Obama's final year in office — with Hillary Clinton on the campaign trail — is not going to be the time for bankers to win big Dodd-Frank changes.

The leadership of both parties went into these negotiations knowing they were going to do some favors to some business groups, and that if they did favors to the financial services industry they were going to have a huge revolt on their hands and Dems backing out on must-pass bills. Consequently, Wall Streeters wound up not scoring any of the wins they were hoping for — thanks to Warren's proven ability to make a mountain out of a molehill. Section 716 wasn't a big deal, but picking a big fight over it built political strength that made it harder to roll back more regulations, while rolling over without a fight would have encouraged the opposite.

This is not a super-rational policymaking process, but it's by no means irrational for Warren to play the game according to the rules at hand. And she's pretty good at it.