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Katie Porter Came to Washington to Go to War With Wall Street

VICE: Katie Porter Came to Washington to Go to War With Wall Street

By Natalie Shure

Arguably the most memorable moment of Katie Porter’s young congressional career came courtesy of a poster. It was March, and Wells Fargo CEO Tim Sloan had just assured the freshman congresswoman from California, sitting before him with the rest of the House Financial Services Committee, that his bank was focused on rebuilding trust with customers after spending years defrauding them. “I’m fully committed to taking the necessary steps to restore our customers’ trust,” he had said in a quote Porter read aloud to the committee. “We’ve already made progress in restoring customers’ trust, and we’ve remained committed to being transparent with investors,” he’d said, in another moment Porter highlighted.

“So it’s safe to say that the statements you’ve made mean something to you, and that customers and investors can rely on those statements?” Porter asked.

“That’s correct,” Sloan replied.

“Then why, Mr. Sloan, if you don’t mind my asking,” she began, reaching under the table for the prop, “are your lawyers in federal court arguing that those exact statements that I read are, quote, ‘paradigmatic examples of non-actionable corporate puffery, on which no reasonable investor could rely’?” There was no backing away: An enlarged image of the actual court document was in Porter’s hand, with the quote in a box dead center.

An on-the-record contradiction like that is a black mark during a congressional hearing; having it hammered home with a whiteboard display is downright humiliating. He didn’t know why Wells Fargo’s lawyers would say that , Sloan said, stammering. But it was clear that either the bank’s lawyers had been lying to the federal judge or its CEO had lied to Porter. She continued: “It’s convenient for your lawyers to deflect blame in court and say that your rebranding campaign can be ignored as hyperbolic marketing, but when you come to Congress you want us to take you at your word, and I think that disconnect is why the American public is having trouble trusting Wells Fargo.”

And with that, Porter had landed a headline-grabbing blow, in a hearing so disastrous for Sloan that he abruptly resigned two weeks later.

In the past year, the former law professor has cemented a reputation as one of the most formidable questioners in Congress, making heads of federal agencies and financial firms squirm in clips that rack up hundreds of thousands of views. As a gridlocked Senate precludes much near-term hope for legislative advancements, Porter has become a surprising hero to progressives and economic populists, a legislator who uses her platform as effectively as anyone in Congress. And she views these viral moments as a way to trigger change. First, you get mad at the men who control the financial system. Then you humiliate them in public. Lastly, and most importantly, you force them to make concessions.

Porter is not an obvious contender for viral stardom. She comes across as neither a politician nor a natural performer. She comes off as nice: a Midwestern-native mom with three school-age kids and a short curly coif, hardly our culture’s avatar for a high-profile antagonist of Big Finance. She’s cheerful, witty, and disarming. But she’s also a renowned legal scholar who’s spent her career studying and teaching commercial law and bankruptcy, and she has a knack for parsing tedious concepts, a trait she has in common with her mentor Elizabeth Warren. She also knows how to get people to pay attention to systemic economic inequality: give them a villain. (Not that she calls them that. When I visited her DC office in July, she and her staff preferred wholesome insults like “ding-dong” and “yahoo.”)

If Sloan is the only witness that Porter managed to help embarrass out of a job, several others have found themselves unwitting dunces caught in her tough-but-clear line of questioning. She used a whiteboard to walk the tongue-tied JPMorgan Chase CEO Jamie Dimon through an Irvine, California, bank teller’s monthly budget, asking how exactly that worker should cover a $567 shortfall after covering basic living expenses with a paltry Chase paycheck. Kathy Kraninger, Donald Trump’s appointee for director of the Consumer Financial Protection Bureau, was unable to answer Porter’s rudimentary questions about annual percentage rates on payday loans. HUD Secretary Ben Carson thought that a question about foreclosures and blight centered on real estate–owned property, or REOs, was about Oreo cookies. (Porter’s office received a gift delivery of Oreos from fellow Hill staffers after that one.) The exchanges are reliably funny and engaging, and have been covered in outlets like the Washington Post, HuffPost, CNN, and elsewhere; headlines describe Porter as putting “Wall Street in the hot seat,” posing “the newest threat to Wall Street,” and “stirring up trouble for Trump.” Finance execs tapped to testify before Congress are reportedly preparing more carefully than usual with their lawyers on how to handle Porter’s questions. “Good!” Porter told me, recalling that. “I want you to be doing that!”

Plenty of stars had to align to get someone like Porter in front of these witnesses. She was a long-shot congressional candidate to begin with: Her district in Southern California’s conservative stronghold of Orange County had never before sent a Democrat to Washington, and while plenty of educated suburban pockets flipped from red to blue in the 2018 midterms, many of those districts—including some surrounding Porter’s—elected moderates. Porter, on the other hand, beat her Democratic Party–endorsed rival and fellow UC Irvine law professor David Min with a progressive platform, running as a mother and consumer advocate calling for things like Medicare for All. (The primary was so contentious that some people close to the race alleged that Min’s camp launched a whisper campaign to use Porter’s divorce from an allegedly abusive ex against her, with one donor even calling her “restraining order Porter” on Twitter.) While the Republican incumbent, Mimi Walters, had a lead on election night, mail-ins and absentee ballots gradually tilted the count toward Porter, who snared 52 percent of the vote.

Despite a career focused on consumer protection advocacy, Porter was hardly a shoe-in for the House Financial Services Committee once she got to Washington. Typically, as David Dayen relayed in The American Prospect, the committee attracts the type of lawmaker who is looking to parlay that post into campaign donations from the financial sector, leading to a bank-friendly atmosphere. But this year, the joint was stormed by firebrand progressives, partially because of a deal struck with Nancy Pelosi in exchange for support for her speakership. For Porter, a member of the Progressive Caucus, landing the slot was a dream come true. Every time someone asked her what assignment she wanted, “I wouldn’t waver,” she told Dayen. “I’d say, ‘House Financial Services Committee.’ It is my life.”

Porter’s life really has been shaped by the banking industry. As a kid growing up on a farm in Iowa in the 1980s, she saw her community ravaged by the so-called “farm crisis”—sparked by years of intense pressure on farmers to take out loans to expand, followed by a painful bust. “It was an incredibly powerful part of my childhood,” Porter explained shortly after her 2018 election, when she was a guest on The Ezra Klein Show. “It’s not really any wonder that I went on to study bankruptcy.”

It probably didn’t hurt that her first course on the topic at Harvard Law was taught by Warren, the bankruptcy expert who has gone on to become a leading 2020 presidential contender. As Warren framed it, bankruptcy was best thought of as the flip side of capitalism—a way to cushion the fall for people on the losing end to help them get back on their feet. “I remember thinking that day that I’ve found the thing I want to study and work on for the rest of my life,” Porter recounted to Klein. Soon after, she began working as Warren’s research assistant (and eventual coauthor), traveling to bankruptcy courts in different cities and interviewing families about their experiences. Once Porter became a law professor herself, she attracted national attention for publishing some of the earliest research on the widespread mortgage fraud that precipitated the financial crisis, having combed through thousands of records and discovered near universal discrepancies between borrowers’ documents and those churned out retrospectively by lenders.

Porter began working at the University of California, Irvine School of Law in 2011, and soon after moving, worked closely with yet another future Democratic presidential candidate when Kamala Harris, then the state attorney general, tapped her to oversee the state’s mortgage settlement program. She transformed what could have been a straightforward administrative role into that of a fiery advocate for families, fielding thousands of calls with a skeleton staff and personally assisting homeowners as they wrangled with their banks. By Porter’s count, this program benefited some 11,000 families in Orange County. She later resumed full-time teaching at Irvine and continued bankruptcy work.

By all accounts, she is missed by her academic colleagues. “Katie is an exceptional scholar. She is thorough and she deeply cares about the families that our project about consumer bankruptcy focuses on,” Pamela Foohey, a collaborator from the Indiana University Maurer School of Law, told me. As the University of Illinois College of Law’s Robert Lawless put it, “Academia’s loss is the 45th Congressional District’s gain.”

Porter’s current position brings her into frequent contact with those who played an active role in exacerbating the financial crisis, and whether or not she’s actively seeking a kind of revenge against them, her new role affords opportunities for direct confrontation that her previous ones did not.

When we met in her office, she was prepping for yet another congressional hearing, carving out her own place in the history of a very specific kind of political theater. “Congressional hearings have always been a sort of public-facing activity,” explained Louis Hyman, an associate professor of history at Cornell who has studied them. “They’re always public relations, they’re always opportunities to put out ideas or establish narratives about how the world is working.” But if journalists have been paying attention to hearings for decades, direct public consumption made possible by social media is relatively new. As Hyman concludes, “They’re more high-stakes than they used to be because of the ability to go viral… they’re more powerful than ever before.”

That also means witnesses themselves are more exposed to public blowback, even if that reaction doesn’t always translate into actual change. Many politicians relish political theater for its own sake, which is why table thumping and how dare you, sir bloviating are so common at these proceedings. But unlike her more performative colleagues, Porter actually seems to care about the answers—which is why she spends so much time honing what she’ll ask. (It’s also why, her staff mentioned, a few fellow committee members joke that Porter ought to give them her leftover questions.) Some weeks, she told me, she pores over a binder of research on her flight back to DC from California, where she commutes home each weekend to visit her kids. Ultimately, like Warren, she’s still a teacher: She’s not trying to stump her witnesses, but instead to force them to grapple with systemic issues like low wages, predatory lending, the housing crisis, and corporate governance.

As I watched her prepare, she was zeroing in on the witness Paul Atkins, a financial regulation adviser on Trump’s transition team who now does consulting work with financial firms on legal compliance, despite having served on the Securities and Exchange Commission from 2002 to 2008, during which time the SEC failed to properly police the market.

The process was a down-to-the-wire spitballing session about Atkins with two staffers on her office couch. “These sessions are pretty informal,” she said to me as I sat in, trying to explain why one staffer had referred to someone as a “ding-dong.” “It’s our private time to air our grievances… so things can get colorful and hotly debated. [Atkins] presided over all these big banks and they failed, and now he’s brought in to offer his advice and we’re supposed to listen to him about what to do?”

“There’s one other interesting thing we found on the internet,” Porter’s chief of staff, Amanda Fischer, interjected. “Atkins has called corporations, quote, ‘weenies’ for caving to pressure from environmental and gay rights groups and unions through shareholder proxy initiatives.”

“We could ask him if he’s a weenie for having failed to take action in 2004, when they were facing an awfully big mess,” Porter offered, testing out a new idea. “‘As a capitalist’—I always like to say that—‘who believes in the need for limited liability, shareholder primacy is an inherent and inseparable part of that. So why then shouldn’t shareholders be bringing their voices to bear on the activities of a corporation? Isn’t that Capitalism 101? And yet you called those people weenies!’”

They spent a few minutes finessing the idea, until a staffer came in to announce that the hearing had begun. Sure, the plan was goofy, but it made a point too. “OK, this is the most pandering we’ve ever done,” Porter said, laughing, before scuttling off to grab a place in line. Congresspeople who wish to ask questions after the testimony have to line up in order of seniority for their five minutes. Once assigned a spot in the queue, they’re allowed to leave until they’re up—time Porter told me she has used to print text for her iconic visual aids in the cramped xerox room next door.

It’s a strategy Porter’s growing fan base seems to believe in. As I walked with her between buildings on the way to question Atkins, a young woman called to her from the stairwell: “That’s my favorite congresswoman—you rock!” Across the country, others would seem to agree—Porter was one of the top House fundraisers in the second quarter of 2019, raking in over $1 million in individual donations, many of which were likely inspired by her popular videos.

Soon after, Porter was face-to-face with Atkins as I watched with her staff from the office on C-SPAN. After a few minutes about SEC oversight, loose capital requirements, and disparagement of shareholder activism, came the kicker: “So I guess I’m struggling—in a capitalist economy, as a capitalist—to understand why anybody would pay you big bucks when you in fact didn’t stand up, and were a weenie in the wake of the financial crisis and were labeling other people that—”

“Mr. Chair, that’s inappropriate!” another committee member whined. A short debate over the rules of the committee and decorum ensued, and though Porter was rebuked, she didn’t seem too unhappy. “I feel very confident that I made my point,” she said.

I couldn’t help but laugh out loud. In an age when no Democrat—let alone a progressive one—is unencumbered by the sobering reality of Republican control of every part of government, it’s gratifying to see members like Porter finding ways to wield power that uniquely suit them. If the path toward building power among consumers and debtors relative to financial titans remains tough to navigate, it’s a relief to have Democrats on the committee who are trying to do so.

I had to ask—did she enjoy facing off against the same financiers whose malfeasance she once studied? Was it fun?

“I wouldn’t say it’s fun,” she said, after a long pause. “The hearing might go quote-unquote-well, and [my press secretary] might say it’s going viral or it’s tweeting or whatever, but I left the Jamie Dimon hearing feeling like I failed, because I didn’t get him to agree to do something about this… the witness is there as an instrument of lawmaking. Policy change is the goal. The goal is to shape things to work better for people.”

I hope she pulls it off.