Financial Reform Bill Appears Likely; Shelby Joins Talks
A sweeping regulatory overhaul of the financial industry gained momentum Tuesday as Sen. Richard Shelby, the ranking Republican on the Senate Banking Committee, rejoined bi-partisan negotiations on the bill, CNBC has learned.
Senate Banking Chairman Christopher Dodd (D-Conn.) is already negotiating details of the proposal with Republican Sen. Bob Corker. The two have just returned from a recess trip to Central America where they continued discussions over the plan.
A revised bill is likely to be introduced next week and appears to have enough support to reach President Obama's desk. The main question is how many Republicans will support the final bill.
A tentative compromise appears to have been reached on the so-called Volker rule, which would prohibit banks from proprietary trading, or trading in financial markets with the banks' own money. Instead of having such a ban written into the bill, the compromise would simply allow regulators to restrict such bank activities.
The White House is hoping to form a broad coalition but is prepared to push through a bill that relies on a small number of more moderate Republicans to clear the Senate's 60-vote filibuster-proof threshold.
The most important hurdle remains consumer protection provisions.
Democrats are prepared to concede their earlier insistence on a new federal consumer protection agency, instead allowing the authority to be housed as a unit within an existing government agency such as the Treasury Department. As long as the head of the unit is subject to Senate confirmation the White House believes sufficient independence will be maintained.
A more difficult issue that Dodd and Corker will have to work out could be the strength of the rule-making authority to agency or unit would get under the bill.