Dodd on Financial Reform Bill: 'We Need to Move Along'
Senate Banking Committee Chairman Chris Dodd (D-Conn.) will introduce a revised package of reforms for the financial sector Monday, essentially sidelining long-running, bipartisan talks, saying there's "not a lot of time left" to move a complicated piece of legislation through Congress during an election year.
"It's not a reflection of something breaking down," said Dodd in an afternoon news conference, adding "the process is moving along very well" and there was "broad, bipartisan agreement."
The committee chairman had been negotiating with GOP panel member Bob Corker on a bipartisan bill for more than a month.
Dodd's briefing came on top of a morning news release, wherein he appeared to signal that key differences over a couple of measures had prompted him to move ahead with his own bill.
“Together we have made significant progress and resolved a many of the items, but a few outstanding issues remain," Dodd said in the statement. “It has always been my goal to produce a consensus package. And we have reached a point where bringing the bill to the full committee is the best course of action to achieve that end."
In a news conference of his own earlier Thursday, Corker said Dodd's "decision was very disappointing", but added he understood "the pressure he [Dodd] was under."
"There's no question the White House, politics and health care have kept us from getting to the goal line," Corker said.
Those comments raised some questions as to exactly what was motivating Dodd, but he appeared to answer some of them in the afternoon.
Prior to Dodd's news conference, a senior Congressional staffer said "the White House was getting restless" with the process and that there is concern that the partisan battle over health care would essentially poison the water between the two parties and eliminate any change for financial reform legislation.
Dodd said little about the health care issue, but repeatedly said time was an issue, particularly in an election year.
"We need to move along," he said. "The clock has become a rather demanding member" of Congress.
Congressional sources agreed with Dodd's assessment.
"It keeps it on course," said one, adding that "the other thing prodding Dodd along" was the knowledge that the House was insisting on a thorough reconciliation process with an open-hearing, conference-committee format to blend the Senate and House versions of the bill. "That's going to take time."
Though both Corker and Dodd said they would continue to work together, there seemed to be some disagreement on the progress of talks, particulary in one divisive era--the creation of a consumer financial protection agency.
Democrats want a powerful, independent agency with a presidential appointee, as well as rule-making, administrative and enforcement authority.
The GOP wants an agency with far less authority, saying its goals and actions could clash with other regulators and potentially threaten the safety and soundness of the financial system
Corker said "we were there," adding that differences were "miniscule", while Dodd said "we're not there yet."
Corker, in a wide-ranging and unusually candid news conference, discussed in great detail many of the measures and issues that had divided the two sides.
Dodd, however, was more circumspect, saying there were four broad areas: protecting taxpayers from too-big-to-fail firms, detecting systemic risk, over the counter derivatives and the consumer agency.
On the other hand, Corker said there was broad agreement to house the new agency in the Federal Reserve, not the Treasury. That concept insured the agency had independent funding, resolved GOP concerns about any conflicts with prudential regulators and accommodated differences over enforcement powers.
He added that the Fed "will have its wings clipped" in the area of bank supervision, reflecting the committee's common desire to revamp the existing structure of bank regulators.
An agreement on derivatives supervision has also been elusive. While Corker confirmed reports that it might not be included in the draft legislation and would instead be handled as an amendment later on in the legislative process, Dodd suggested it would be in his proposal Monday.
Where negotiators stand on the so-called Volcker rule is also unclear. The proposal, which has been pushed by the White House, would bar Wall Street firms from proprietary trading and cap the amount of insured government deposits firms could hold.
Both senators said talks would continue, with Dodd saying they would be "enhanced by having something on the table."
Today's development is hardly unexpected. Dodd has said more than once that he would introduce his own bill if he thought it was necessary.
As recently as last week, Dodd hinted that differences over the consumer agency remained significant, at which time he appeared to be drawing a line in the sand over the issue of its independence and powers.
"Dodd is going for broke, hoping that somehow he can push a bill out of committee even though he has not been able to work out crucial deals behind closed doors," said banking analyst Bert Ely. "I have been highly skeptical for months about the prospects of major financial regulation legislation this year. I now am more skeptical than ever "
For all of his negotiating with Republicans, it is still unclear how much support Dodd has from Democratic committee members. His original draft bill in November met opposition from both sides of the political aisle.
"It's not clear that Dodd has all his Dems lined up, but he probably has a good chance of keeping them at the Committee level," said Mark Calabria, a former senior banking committee aide, now with the Cato Institute.
Sen. Jack Reed of Rhode Island, for instance, has said he plans to introduce an amendment calling for an independent agency with a presidential appointee as director.
Another key consideration is the committee's ranking GOP member, Richard Shelby of Alabama, whose talks with Dodd reached a dead end earlier this year, prompting Corker to step into the mix. Shelby Thursday said Republicans "remain open to finding common ground" with Dodd. Analysts say his support is critical to moving the bill forward.
Even still, any committee bill would have to pass the full Senate, where a close vote is expected, and then be reconciled with the House version.
Some Democrats are opposed to giving the Fed any new powers, which is one area where Dodd appeared to be compromising with Republicans.
Corker acknowledged a tough road ahead for any Senate version of the bill.
"The elephant in the room is reconciliation and trying to get a bill out of committee," he said.
House Financial Services Chairman Barney Frank, who shepherded the House version to success late last year and worked closely with the White House on the issues, has said he wants a transparent reconciliation process.
"If the GOP wants to vote against the consumer agency let them do it in public," said the Congressional source.
Financial reform—always among President Obama's top legislative priorities—has assumed even greater importance since health care reform stalled.