Deadlock over

Wall St.
reform legislation ended to allow Senate floor debate

By Jon H. Harsch

© Copyright Agri-Pulse Communications, Inc.

Washington, April 28 – No one may ever know who blinked first Wednesday afternoon. But what’s important is that either Democrats made concessions on the proposed bank-funded $50 billion liquidation fund – or else a couple of Republican Senators broke ranks by telling their leadership they would no longer support blocking floor debate of the Democrats’ Wall Street reform legislation. A third possibility is that both of the above happened. Another element may have been the Democrats’ threat to keep the Senate in session overnight, perhaps hoping this tactic would show up Republicans as “last-ditcher” defenders of Wall Street.

Whatever the cause, Senate floor debate with consideration of plenty of amendments from Democrats as well as Republicans should begin either tomorrow or next week. Amendments are likely to focus on three main concerns:

  • Whether major banks will be required to pay into a liquidation fund designed to provide an orderly unwinding of any failing major financial institution – a “soft landing” that would neither threaten the overall U.S. economy nor require taxpayer funds.
  • Whether a new consumer protection bureau will have extensive authority as sought by most Democrats or the strictly limited authority which Republicans insist on.
  • Whether the opaque world of derivatives trading will be brought into full sunlight as specified by Senate Agriculture Committee Chair Blanche Lincoln (D-AR) in her committee-passed derivatives bill, or whether there will be more of the exemptions which Republicans generally favor.

After the third procedural vote in three days in which Republicans stood united to block debate, Sen. Susan Collins (R-ME) told reporters Wednesday that “I am going to vote to proceed to the bill.” Bowing to that defection and the possibility that Sens. George Voinovich (R-OH) and Olympia Snowe (R-ME) had delivered the same message to him privately, Senate Minority Leader Mitch McConnell (R-KY) tacitly acknowledged that he would end the standoff, saying “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.”

Meanwhile Senate Banking Committee Chair Chris Dodd (D-CT) and Ranking Member Richard Shelby (D-AL) ended their months of negotiations aimed at agreeing on a bipartisan bill. Shelby blamed the breakdown primarily on disagreements over the Dodd bill’s new consumer protection bureau. He warned that “This massive new bureaucracy would have unchecked authority to regulate whatever it wants, whenever it wants, however it wants. I am aware of no other arm of the federal government this powerful, yet so unaccountable.”

In response, Dodd commented that “I cannot agree to his desire to weaken consumer protections given the enormous abuses we have seen.” With obvious relief, Dodd concluded with a statement that “It is time for the Senate to operate as the Senate should. Members must be allowed to offer amendments. We must allow many voices to be heard as we work to create a sound foundation for our nation’s future economic strength.”

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