Republicans Reject Finance Bill Again, and Offer a Plan of Their Own

by
April 28, 2010

By EDWARD WYATT and DAVID M. HERSZENHORN, The New York Times

WASHINGTON — Republicans thwarted the Democrats’ efforts to overhaul financial regulation for a second day on Tuesday and floated an alternative proposal with some crucial differences in the regulation of consumer lending.

The plan would also tighten regulation of Fannie Mae and Freddie Mac, the mortgage giants, provisions that were not included in the Democrats’ proposal.

The Senate Republican leader, Mitch McConnell of Kentucky, warned that the Democrats’ bill would reach deep “into every nook and cranny of American business,” and tried to portray his party as a protector of Main Street from the unintended consequences of a bill aimed at fixing problems on Wall Street.

Democrats again accused the Republicans of demanding that the parties resolve all of their differences in closed-door negotiations before bringing the bill to the Senate floor for amendment — a process in which the Democratic majority enjoys a decisive advantage.

The Democrats’ second floor defeat, which was expected, came as a Senate investigations panel opened hearings on Goldman Sachs’s actions in the 2008 financial crisis.

For their part, Republicans pushed back on efforts by Democrats to portray them friends of Wall Street and business as a whole, intent on blocking tighter regulation.

While the Republican alternative was intended to draw contrast with the Democrats’ approach, it also revealed many areas of broad agreement, potentially bolstering the Democrats’ argument that the remaining differences could be worked out quickly and that there was no reason for delay.

Like the Democrats’ bill, the Republican proposal would provide for the liquidation of a troubled financial company, but paid for by the company’s creditors and its shareholders, rather than by a resolution fund financed by the largest banks, which the Democrats’ bill would create.

Like the Democrats, the Republicans would establish a consumer protection agency to deal with financial companies, but they would limit its powers to regulate smaller banks and nonfinancial companies.

Mr. McConnell and Senator Richard C. Shelby of Alabama, the senior Republican on the banking committee, said their biggest substantive objections to the Democratic proposal related to the provisions for a new Consumer Financial Protection Bureau, an independent body to be located within the Fed, which would regulate credit extended to the public by banks, credit card companies and other institutions.

Continue reading this article in its entirety:  http://www.nytimes.com/2010/04/28/business/28regulate.html

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