Senate Republicans took what they could get.
With bipartisan negotiations at an impasse and Democrats pledging to force votes until they relented, Republicans ended their standoff Wednesday over a financial regulatory reform bill, agreeing to allow a debate to begin on the politically popular measure.
Alabama Sen. Richard Shelby, the ranking Republican on the Banking Committee, walked from the negotiations after deciding that Chairman Chris Dodd (D-Conn.) would make no further concessions on the scope and powers of a new consumer protection agency.
Dodd was under pressure from the Democratic caucus to not weaken the bill in any significant way, believing that there was no need to do so. The politics of the issue were so lopsided in their favor that Republicans would eventually have to fold without much to show for it, Democrats believed.
And by late Wednesday â€“ after three days of negative headlines and an 11-hour grilling Tuesday of Goldman Sachs executives by frustrated senators â€“ Republicans backed down. They won a few concessions, most notably the removal of a $50 billion industry-financed fund to wind down doomed companies. But not the kind of sweeping changes that would appear to move the bill significantly in their direction.
The standoff ended with a whimper, as Republicans agreed to proceed to the bill on a voice vote, declining an opportunity to put their position on the record.
â€œWe’ve done what we’ve set out to do,â€ said Sen. Bob Corker (R-Tenn.). â€œWe spent three days, tried to give Shelby some time, had a degree of success and now it’s time to move to the bill. There’s unanimity. Nobody expressed a dissentingâ€”not a single person expressed a dissenting view to that.â€
Democrats claimed victory, but they face a perilous week or two as the Senate debates the measure.
“It’s time for Wall Street to come out of the shadows and out into the light of day,â€ said Sen. Patty Murray (D-Wash.). â€œAnd it’s time for negotiations to come out of the back room and onto the Senate floor. . . .It’s time to put an end to obstruction and begin working for American families, so I’m glad that we’re finally now on this bill.”
As they move forward, Democrats still need to resolve internal differences over a section of the bill regulating derivatives, the risky financial instruments that contributed to the economic crisis. The bill goes farther than the administration and the Federal Reserve wants in requiring financial firms to spin off their derivatives trading operations â€“ regulation that could mean loss of billions of dollars in revenue for big Wall Street firms.
By striking the $50 billion fund, senators will need to find a way to make up for that lost revenue to ensure the bill is deficit neutral.
Reid and Dodd have also promised a more free-flowing amendment process than was allowed during the health care reform debate. Both Democrats and Republicans are preparing hundreds of amendments, some of which could be viewed as poison pills that threaten passage. Progressives are expected to propose a series of populist initiatives that could prove politically-difficult to defeat.
And Democrats may need to craft a compromise at some point to assuage Sen. Ben Nelson (D-Neb.), who voted with Republicans to block debate on the bill, expressing concern about a provision that would require companies such as Warren Buffettâ€™s Berkshire Hathaway to put up billions of dollars as collateral on existing derivatives contracts.
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