Financial overhaul’s unexpected fallout: Closing of D.C.’s Small Savers day care

By Lisa Rein Washington Post Staff Writer
Wednesday, September 8, 2010; 10:47 PM

Washington’s battle for regulatory reform wasn’t supposed to have this kind of collateral damage.

President Obama and Congress fought Wall Street for a year to push through a law to reform the country’s banks. But now they’re facing another fight they never expected – steps from the White House – against the toddler set and their high-octane parents.

The new law is threatening the existence of the Small Savers Child Development Center, which has operated for 24 years in the basement of the Office of Thrift Supervision at 1700 G St. NW. The bank watchdog that failed to police the country’s savings and loans is being closed – and its property dissolved. That means Small Savers has to go, too.

Small Savers parents – who include White House staffers, World Bankers, lobbyists, lawyers and journalists - have quickly become a lobbying juggernaut to save the small Washington institution under G Street.

“It will be a real tragedy if the financial crisis and the whole great economic soap opera claimed this day care center, too,” said Leon Wieseltier, literary editor of the New Republic magazine, whose 8-year-old son spent “four very happy and rich years” at Small Savers. “It may turn out the only thing working [in the building] was the day care center.”

Wieseltier said he’s going to “call my various illustrious friends in the White House” to save the place. Samantha Power and Cass Sunstein, both Obama advisers, have enrolled their toddler at Small Savers, too.

The home-away-from-home for 70 children has been a haven for federal and private-sector parents since 1986, when a group of parents persuaded the thrift regulator’s predecessor to donate the empty basement space.

In a city where quality, affordable child care is scarce, federal government child-care centers can be premium spots.

The federal government runs 16 child-care centers in the District and close to 100 more in 31 states, serving 8,000 children. Some agencies subsidize slots. At Small Savers, where it’s $1,425 per month for infants, the tuition is higher than the government’s but cheaper than many private child-care centers. The center also offers some subsidies.

Like Small Savers, with 60 percent federal parents, other government child-care centers give preference to federal employees before opening spots to parents in nonprofits and the private sector. But, as with many day care centers, long waiting lists are legendary.

It’s the management, parents say, that makes Small Savers so beloved. The $1 million-a-year nonprofit is run by a parent board and enjoys free rent and utilities, which holds down tuition costs. Parents, who are required to volunteer every year, drop off kids – from the tiniest babies to 5-year-olds – starting at 7:30 a.m.

The 22 teachers, trained in the Montessori child-development method, get full benefits and vacations and they stay for years. The director, Carolyn Mackey, has lasted 17 years.

“We’re a small family,” Mackey said. “You should see the kids who come back when they grow up.”

Embedded in Title 3, Section 323, of the 2,300-page financial reform bill the president signed in July is a line designating that the property belonging to the thrift supervision office be dissolved, as well.

“We’ve been eliminated by regulatory reform,” said William Ruberry, spokesman for the Office of Thrift Supervision, which sent the child-care center a letter last month. “We told them we’ll continue to support them as long as OTS continues to exist as an agency.” The agency’s 1,000 employees will be transferred to various financial agencies that are implementing the law.

As for whether Congress knew financial regulation would eliminate Small Savers, Ruberry said: “I’d be surprised if anybody on the Hill was aware of this question.

Legislation always has winners and losers, but they’re usually easy to spot. The consequences for Small Savers were harder to predict.

“We’re trying to convey to congressmen, ‘Sir, you didn’t intend to close down a day-care center,’ ” said Adina Renee Adler, an energy lobbyist leading the public relations campaign. Her 3-year-old daughter started at Small Savers when Adler worked in the Office of the U.S. Trade Representative. “But that’s the reality of this financial reform bill.”

Though the deadline is 10 months away, Adler said the center may have to close sooner if families begin pulling out their children and tuition dollars begin to disappear.

The parents are targeting e-mail groups and legislators, including the lead sponsors of the financial reform bill, Sen. Christopher J. Dodd (D-Conn.) and Rep. Barney Frank (D-Mass.), and Sen. Kirsten Gillibrand (D-N.Y.) for her family-friendliness.

They’ve appealed to the transition teams for the financial agencies administering the new law. They have talking points and fact sheets. Every lever of power is being pushed.

“We’re hitting everyone hard,” Adler said. “Nicely, of course.”

There are limits to how public the lobbying by some parents can be, since they work at the agencies that helped write the financial reform law.

“He’s not going to comment on this type of issue,” Office of Management and Budget spokesman Kenneth Baer said of Sunstein, a constitutional scholar who heads the White House Office of Information and Regulatory Affairs.

So far, lobbying efforts have not yielded much.

“I don’t have anything for you on that issue right now,” said Kevin Mukri, a spokesman for the Office of the Comptroller of the Currency, which is absorbing a majority of the thrift agency’s employees, banks and field offices, and could move into the building.

The fate of Small Savers “is one issue of hundreds” that need to be settled when one government agency is absorbed by another, Mukri said. “Like many things in government, there’s not a simple answer.”

Complicating the situation is the fact that the center never had a formal lease or contract with the Office of Thrift Supervision, just an informal agreement. The agency is not funded by the government, but by assessments on savings and loans, further placing its operations out of the government’s reach. Just 10 percent of the children have parents who work at the thrift office.

Dodd, the Senate banking committee chairman, who has two young children, is “looking into” whether Small Savers can stay once the thrift agency closes, committee spokesman Sean Oblack said in a statement. “Senator Dodd believes it is vital that all American families have access to affordable, quality childcare.”

John Harrington, who has sent three children to Small Savers, said the center is a model of effective government: It pays for itself and operates in surplus space.

“It definitely is frustrating to sit up on Capitol Hill at these hearings and think, ‘This is an interesting law, but it’s not going to impact me,’ ” Harrington, presi’dent of the White House News Photographers Association, said. “Now it’s hitting me.