Alabama senior Sen. Richard Shelby’s political career spans nearly 40 years. He grew up in Birmingham, the son of a steelworker. After earning two degrees from the University of Alabama, he stayed in Tuscaloosa and practiced law with Walter Flowers, who was later a conservative Democratic congressman. Shelby, a Democrat at that time, was elected to the state Senate in 1970 at age 36. When Flowers ran, unsuccessfully, for the U.S. Senate in 1978, Shelby ran for his House seat. The critical contest was the Democratic runoff against Chris McNair, an African American state legislator whose daughter, Denise, was one of the four young girls killed in the 1963 Birmingham church bombing. Although the district had the highest black percentage in Alabama at the time, Shelby won 59%-41%. In the House, Shelby had a conservative voting record, opposing the Voting Rights Act extension and the Martin Luther King Jr. holiday. He ran for the Senate in 1986 and won the Democratic primary with 51% of the vote after then-Secretary of State (and later governor) Don Siegelman withdrew. In the general election, he ran ads against incumbent Republican Jeremiah Denton, a retired admiral who had been a prisoner of war in Vietnam, for voting to cut Social Security and for owning two Mercedes-Benz cars. Shelby won by 7,000 votes. Read More

Alabama senior Sen. Richard Shelby’s political career spans nearly 40 years. He grew up in Birmingham, the son of a steelworker. After earning two degrees from the University of Alabama, he stayed in Tuscaloosa and practiced law with Walter Flowers, who was later a conservative Democratic congressman. Shelby, a Democrat at that time, was elected to the state Senate in 1970 at age 36. When Flowers ran, unsuccessfully, for the U.S. Senate in 1978, Shelby ran for his House seat. The critical contest was the Democratic runoff against Chris McNair, an African American state legislator whose daughter, Denise, was one of the four young girls killed in the 1963 Birmingham church bombing. Although the district had the highest black percentage in Alabama at the time, Shelby won 59%-41%. In the House, Shelby had a conservative voting record, opposing the Voting Rights Act extension and the Martin Luther King Jr. holiday. He ran for the Senate in 1986 and won the Democratic primary with 51% of the vote after then-Secretary of State (and later governor) Don Siegelman withdrew. In the general election, he ran ads against incumbent Republican Jeremiah Denton, a retired admiral who had been a prisoner of war in Vietnam, for voting to cut Social Security and for owning two Mercedes-Benz cars. Shelby won by 7,000 votes.

As one of a half a dozen or so conservative Southern Democrats in the Senate in the mid-1980s, Shelby at first attracted little notice. He voted for the confirmation of Clarence Thomas to the Supreme Court in the wake of sexual harassment claims against Thomas by a former colleague. And Shelby voted for the 1991 resolution to go to war in the Persian Gulf after Iraq invaded Kuwait. In 1992, he was re-elected 65%-33%, breaking a jinx on a seat that before Shelby’s election in 1986 had had four different occupants in 10 years.

Soon after President Bill Clinton took office in 1993, Shelby broke ranks with the Democratic Party. At a meeting with Vice President Al Gore, he turned to the assembled Alabama television cameras and opposed the Clinton program as “high on taxes, low on spending cuts.” In response, the administration announced that a multimillion-dollar space facility would be built not in Alabama but in Texas (although it eventually was built in Alabama). The more he defied Clinton, the better Shelby’s favorable ratings were at home. He lined up with the Republicans and against the administration on vote after vote. The day after Republicans regained control of the Senate in 1994, Shelby announced he was switching parties, increasing the GOP majority to 53-47. Republicans happily allowed him to keep his seniority on the Banking Committee and gave him seats on Appropriations and its Defense Subcommittee. He got a seat on the Senate Intelligence Committee as well, putting him on a course to assume the chairmanship of Intelligence in 1997.

By the time of the September 11 attacks, the Senate was back in Democratic hands, but Shelby, as the ranking Republican on the Intelligence panel, was an important player in the ensuing weeks and months. He had adopted an adversarial posture toward the intelligence agencies during the Clinton and Bush presidencies, and soon after September 11, Shelby stopped just short of calling for the resignation of Central Intelligence Agency Director George Tenet, who was appointed by Clinton and retained by Bush. He was negatively impressed when, after India conducted three underground nuclear tests, U.S. officials “didn’t have a clue,” as Tenet put it. Shelby also was critical of the lack of information about the February 1993 World Trade Center bombing and the 2000 attack on the U.S.S. Cole. In June 2004, when Tenet announced his resignation, Shelby said, “What was a surprise was that he held onto the job as long as he did.”

Aside from his positions on the intelligence agencies, Shelby was mostly supportive of the Bush administration’s conduct of the war on terrorism. In December 2001, he was one of 10 senators to sign a letter calling for a plan “to eliminate the threat from Iraq.” But he clashed with the two Intelligence Committee chairmen, Democratic Sen. Bob Graham and Republican Rep. Porter Goss, both of Florida. He helped push aside their choice of staff director for the joint probe of intelligence agencies, and he installed his own candidate. At first, he opposed the appointment of an independent September 11 Commission as unnecessary, but relented in 2002. He was out front in calling for the creation of a director of national intelligence after the intelligence agencies, in his view, were unable to work together and to share information. That position was later upheld by the 9/11 Commission and adopted in the intelligence bill approved by Congress in 2004. That bill included a Shelby proposal to give the DNI ombudsman access to all intelligence for analytical reviews, but he was displeased that the new director would not be a Cabinet member.

On domestic issues, Shelby has compiled a conservative record. But he is not a free market purist. Despite his party switch, he has remained friendly with trial lawyers, who usually support Democrats in Alabama. He opposed Alabama colleague Jeff Sessions’ amendment to cap lawyers’ fees in tobacco cases, and insisted tort reform was a state issue. He voted against a 2004 bill to protect gun manufacturers from liability for actions of users of their products. He was the only Senate Republican to vote against financial services deregulation in 1999, and he opposed allowing federally insured banks to sell real estate or insurance.

Since January 2003, Shelby has been either the chairman or the ranking minority member of the Banking, Housing and Urban Affairs Committee, and from that perch, has been at the center of congressional attempts to stem problems in the mortgage and insurance industries. On a hotly lobbied issue in 2003, he supported defining stock options as expenses, a measure opposed by the high-technology industry. The same year, he presciently quizzed Federal Reserve Chairman Alan Greenspan about the increasing number of home loans to borrowers with weak credit histories, a trend that sent the home mortgage market into a tailspin by 2008. In July 2005, the committee voted along party lines for Shelby’s legislation to impose tighter limits on Fannie Mae’s and Freddie Mac’s portfolios, but it foundered on the side issue of creating an affordable housing fund. In 2008, Democratic Chairman Christopher Dodd of Connecticut pushed a compromise housing bill that would allow bankruptcy judges to restructure mortgages and another proposal to refinance mortgages for millions of homeowners at risk of defaulting. Consumer groups pushed for both, but could not get by Shelby. The government, he said, should not engage in a “taxpayer funded bailout of investors or homeowners.” He later reached agreement with Dodd on a bill to allow Fannie Mae and Freddie Mac to fund the refinancing of home mortgages, but he also got a provision increasing capital requirements for the two quasi-public mortgage giants.

Shelby opposed the $700 billion rescue of the financial markets in September 2008, though President Bush was pushing the legislation. Two months later, he opposed a massive government loan for the Big Three domestic automakers, which he called “dinosaurs.” After the automakers presented their plan for recovery in December 2008, he said, “I wouldn’t loan them any money. They’re either failed or failing.” He threatened to filibuster and the bill did not pass the Senate. When he was criticized on the grounds that he was defending foreign automakers with plants in Alabama, he pointed out that he had voted against an earlier bailout of Chrysler long before the plants were built. In 2010, Shelby again came under fire for blocking the nomination of esteemed economist Peter Diamond to the board of the Federal Reserve. He insisted Diamond was not ready to serve and lacked experience and knowledge in monetary economics, comments that were derided by national media outlets after Diamond won the Nobel Prize in economics in October 2010.

As the ranking Republican on the committee during the Obama administration, Shelby became a key player in efforts to reform the nation’s financial regulatory system in 2009-2010. The bill reined in the over-the-counter derivatives market as well as granted regulators the power to take over firms and liquidate them as a way to prevent future government rescues. Shelby and Dodd appeared ready to work together during the early stages of negotiations on the bill. When the Obama administration wanted to designate the Federal Reserve as the top regulator of systemic risk in the financial system, both Shelby and Dodd opposed the idea. The two supported a move toward ending future government bailouts, and they reached an agreement in May 2010 on a provision that would remove a $50 billion fund designed to pay for orderly liquidations carried out by the Federal Deposit Insurance Corporation. Instead, they offered a substitute amendment that would give the FDIC a line of credit from the Treasury Department, which would then recoup costs by the sales of assets. Shelby and Dodd also agreed, in theory, with the creation of a consumer financial protection division or agency. However, a persistent sticking point surfaced over the details of creating the new entity. While Dodd and the Obama White House wanted the new consumer protection agency to be housed within the Federal Reserve and given more independence, Shelby wanted to create a consumer protection division within the FDIC. The amendment failed 61-38.

Shelby expressed other reservations about the bill, including its failure to address Fannie Mae and Freddie Mac, which received substantial rescue funds. When the initial financial services reform bill was passed by the Senate in late May, Shelby voted against it. Meanwhile, Dodd was criticized by House Financial Services Chair Barney Frank, D-Mass., for dealing with Shelby and other Republicans who voted against the original bill. Still, Shelby was one of five Senate Republican conferees involved in hashing out the differences between Senate and House bills. In the final version, Shelby fought for and won an amendment giving the Securities and Exchange Commission greater powers and independence in monitoring the financial markets. His provision allowed the SEC to circumvent the White House and submit its budget request directly to Congress, and it gave the commission authority to use up to $100 million a year in reserve funds to respond quickly to unforeseen problems in the markets.

A few years earlier, Shelby was deeply involved in another major change in SEC operations. In 2006, he pushed to enact a bill to direct the commission to designate ratings agencies as Nationally Recognized Statistical Ratings Organizations if they meet certain standards over three years. The SEC had been enforcing a 1975 rule that prevented many ratings agencies from qualifying, and that left 80% of the business in the hands of Moody’s and Standard & Poor’s. “The dominant rating agencies failed millions of investors by neglecting to lower their ratings on Enron, WorldCom and other companies headed for bankruptcy. The absence of timely downgrades in these cases was the product of an industry that was beset by conflicts of interest and a lack of competition,” Shelby said.

In his role on the Appropriations Committee, Shelby looks out for Alabama’s interests. When the sock industry in DeKalb County—which calls itself the “Sock Capital of the World”—stood to be hurt by a 2002 free trade bill, he held up the bill to get protection from socks produced in the Caribbean, and in 2004, he got country-of-origin labeling for imported and domestic socks. He has obtained some $70 million for University of Alabama at Birmingham medical campus buildings, one of which is named for him, and funds for refurbishing the Vulcan statue on Birmingham’s Red Mountain—a favorite target of Sen. John McCain, R-Ariz., the 2008 presidential candidate who has crusaded against earmarks, the special provisions tucked into spending bills by individual lawmakers. In 2007, Shelby voted for a measure to force senators to disclose their earmarks, but he was the only Republican senator to oppose a bill to allow the president to send back individual spending items for up-or-down votes in Congress. He registers near the top of the annual list of wasteful spending earmarks compiled by the watchdog group Citizens Against Government Waste.

Shelby’s party switch caused him no trouble in increasingly Republican Alabama. In 1998, he was reelected 63%-37% over a retired ironworker who mortgaged his pickup truck to pay the $2,672 filing fee. For the 2004 election, his Democratic opponent was Wayne Sowell, Alabama’s first black Senate nominee and a telephone claims representative for the Social Security Administration in Birmingham. Shelby spent only $2.3 million of the $11 million he had stockpiled for the contest, and won 68%-32%, running behind in only nine black-majority counties in the Black Belt. He easily won re-election in 2010 against Democrat William Barnes, a Birmingham lawyer.