Today in Washington, D.C. - April 28, 2010 - Financial Regulation Bill Headed to Floor Debate

The Senate resumed consideration of the motion to proceed to S. 3217, the Dodd financial regulation bill. At 12:20 PM, the Senate Majority Leader Harry Reid planned to forced a third straight cloture vote on the motion to proceed to the Dodd bill, even though he failed to get 60 votes last night by the same margin as on Monday, 57-41. Reid also re-filed cloture on the motion to proceed to the bill last night, which would allow for yet another cloture vote on Thursday.

However, an agreement was reached on a single contentious element of the overhaul proposal: the creation of new government authority to wind down failing financial firms.  The Democrats conceded that they would kill a proposed $US50 billion ($54bn) fund to break up large, failing financial companies. The move gave Republicans an opening to end their opposition to moving the legislation as even their unified position had started to fray.

However, Sen. Shelby (R-AL), the ranking member on the Banking Committee and the main GOP negotiator who brokered the deal with Sen Dodd, informed Senate Republicans that bipartisan negotiations don’t seem like they’ll go any further, as Democrats aren’t budging yet on the regulatory overreach in their consumer financial protection agency provisions. There’s no deal on moving forward, but  thanks to Republicans sticking together, Sen. Shelby had enough time to get key concessions on protecting taxpayers from paying for future bailouts.

Note the bill has never made it through cloture, so keep in mind that when the bill comes to the floor for debate, whatever amended version emerges from floor debate would still need to get 60 votes to pass. So far the Democrats are not very open minded as identified previously.

Senate Republican Leader Minority McConnell issued the fooling statement today: "I appreciate the efforts of Sen. Shelby to work toward a bipartisan solution on an issue that will have an impact on nearly every American. The time afforded by my Republican colleagues and Sen. Ben Nelson was instrumental in gaining assurances from the Chairman that changes will be made to end taxpayer bailouts and the dangerous notion that certain financial institutions are too big to fail.

"Unfortunately, Sen. Shelby believes that continued talks on a number of provisions affecting Main Street will not bring the negotiators any closer to an agreement. Now that those bipartisan negotiations have ended, it is my hope that the majority’s avowed interest in improving this legislation on the Senate floor is genuine and the partisan gamesmanship is over.  I remain deeply troubled by a number of provisions in this bill and will work aggressively in the days ahead to ensure that the majority does not use our mutual interest in regulating Wall Street to extend the federal government’s unwanted hand into Main Street."

Today,  The Hill reports, “The Democratic National Committee (DNC) launched a new national television ad targeting all 41 Senate Republicans who voted earlier this week against allowing debate to begin on Wall Street reform legislation.” And in a story titled “White House keeps losing votes -- and loving it,” The Washington Post writes, “In the last two days, the White House has lost two straight votes in the Senate that would have moved the massive overhaul of the financial system along. . . . But don't feel bad for the West Wing. Obama aides are practically giddy about the turn of events. . . . [T]he White House and Democratic allies are relishing the rhetorical gift that Republicans have given them. They have once again described the GOP as the party of ‘no.’ And they have sought to paint them as the defenders of greedy and irresponsible Wall Street moguls.”

Of course, all this ignores the fact that Democrat Sen. Ben Nelson of Nebraska voted both times with Republicans, noting his concerns that the bill could adversely affect businesses on Main Street. Speaking on the Senate floor this morning, Senate Republican Leader Mitch McConnell noted that even The New York Times is warning that the Democrats’ bill could affect businesses that had nothing to do with the financial collapse. The Times writes today, “The Democrats’ bill gives broad powers to a consumer protection agency to regulate almost any business that extends credit, meaning that companies like car dealers and professionals like orthodontists who allow customers to pay over time could be subject to a new regulatory and supervisory regime.” As Sen. McConnell said, “The last thing we want is for the little guy to get hurt by a piece of legislation that’s intended to rein in bankers on Wall Street.”

But more and more concerns have been raised about precisely that possibility in the last few days. It was only yesterday that another NYT report pointed out the fears of Mars, Harley Davidson, USAA, and eBay, among others, that the bill would subject them to new government regulations.

Sen. McConnell noted, “In fact, the only people who seem willing to come out in support of this bill are the executives at Goldman Sachs — the biggest bankers at the biggest Wall Street firm of all. The CEO of Goldman Sachs was here on the Hill yesterday discussing his firm’s role in the financial crisis, and the point he made about this bill is that he agrees with the President, who said last week that the biggest beneficiaries of this bill are on Wall Street.” Indeed, at yesterday’s hearing Goldman Sachs CEO Lloyd Blankfein told Sen. Tom Coburn (R-OK), “[L]ast week, in New York, I listened to a speech by Barack Obama at Wall Street, and one of the points he made resonated with me because I’d said it myself. He said that the biggest beneficiaries of reform will be Wall Street itself.”

Another problem with the bill that’s gotten little attention is the creation of the Office of Financial Research and Bureau of Consumer Protection, which the bill says will “have the authority to gather information from time to time regarding the organization, business conduct, markets, and activities of persons operating in consumer financial services markets.” But who does this apply to?

As Sen. McConnell asked, “Does having a credit card make you a person operating in consumer financial service markets? What if you sell something on eBay and someone pays you with their credit card through Paypal? Does that make you someone operating in consumer financial service market?” It doesn’t appear that the bill makes the answers to these questions clear.

Republicans want a bill that addresses the real problems on Wall Street, but the Democrat bill, as it stands, perpetuates bailouts, extends government regulation to main street businesses and generates consumer privacy concerns. To get a good bill, these issues need to be addressed, and hopefully they can be in bipartisan negotiations, if Democrats put their political games aside.

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