Stage Set for Another Clash Over Financial Reform Bill
Senate Democrats Wednesday prepared for a third procedural vote to advance a sweeping financial reform bill, after the latest round of talks on a bipartisan compromise appeared to yield no agreement.
"We are going to keep trying; we will hold another vote," Senate Banking Committee Chairman Chris Dodd of Connecticut said in a statement late Tuesday night, after Republicans succeeded in preventing Democrats from recording the 60 votes necessary on the legislation.
Senate Majority Leader Harry Reid of Nevada has scheduled another vote for 12:20 p.m. ET today.
Sen. Bob Corker (R-Tenn.), a banking committee member, told CNBC that the vote outcome was likely to be the same as the previous two. "There's still a going-through-the-motions effort," he said, sounding somewhat downcast. "We're not focusing on the substance that really matters to the American people."
The vote Tuesday, which was technically a revote of Monday's motion, ended with the Democrats three votes shy of the 60 needed for a super majority under Senate rules, which would allow them to avoid a filibuster. The vote, 57-41, was no different than the day before. Once again, Sen. Ben Nelson of Nebraska broke ranks with the Democratic majority by voting no.
The GOP's ranking member of the banking committee, Richard Shelby of Alabama and GOP leader Mitch McConnell of Kentucky are leading their party's effort to vote in unison against the Democrats.
Sources say the Democrats plan to hold as many votes as necessary to get the one or two defections needed to reach 60 votes. Republicans hold 41 seats.
One senator mentioned in that category, Susan Collins of Maine, told NBC's "Today Show" Wednesday that she planned to vote against the motion again. "We don't have an agreement on the floor, so I will [vote against it]," she said. "Republicans are trying to strengthen the financial reform bill."
Both parties say they want a strong "yes" vote, meaning the support of 70-80 members, on the wide-ranging reform legislation, in the wake of the nation's worst financial crisis in 80 years. But there's also the chance that one party or the other can force the other's hand by influencing a small number of votes.
At this point the Dodd-Shelby talks, which have been going on for months, look increasingly unlikely to yield a group of compromises on several big issues dividing the parties.
Corker suggested that an agreement was possible but unlikely for political reasons.
"We could fix it in five minutes," he said, using the too-big-to-fail issue as an example. "In many way it is purposeful that it hasn’t been fixed yet, so there's an issue that's still out there."
Meanwhile Shelby's staff Tuesday continued to work on a substitute bill, which will be "finished soon, but not today [Tuesday]," according to one source.
A summary of the bill was circulated on Capitol Hill Tuesday. Much of it addressed the process of dealing with too-big-to-fail issue, the lending authority of the Federal Reserve and the powers of a new Consumer Financial Protection Agency being proposed.
When asked for his opinion of the proposals, Corker said: "I'm not sure what the purpose of it is. I'm not going to spend a lot of time on it."
Summary of the Republican Substitute Bill
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Under one scenario, Democrats might consider some of those proposals as amendments, if and when the bill gets past the current stage and becomes a matter of debate.
There's been much speculation about just how many amendments the Democratic leadership will allow at this point. One purpose of the Dodd-Shelby talks is to yield an agreement on a number of measures that could wrapped into one co-sponsored amendment to Dodd's draft legislation, thus simplifying the process.
Democrats are somewhat divided about the effectiveness and utility of those talks at this point. A small group think they are inappropriate, if not unnecessary, and want to push the draft bill largely in its current form. Others say the talks should involve limited compromise and only for the purpose of swaying the votes of a couple individual Republicans.
"Negotiate only to get the necessary votes to get it passed," said one senior Congressional staffer familiar with the thinking of President Obama and the Democratic congressional leadership. "Don’t give away the store to get Dick Shelby on board."
That strategy may soon be more evident. Even Republican Whip John Kyl admitted Tuesday that his party doesn't have the votes for a filibuster "even if it wanted to."
Getting Nelson on board is another matter.
His second no vote may have been more of a surprise than his first. Going into the Monday vote, he had indicated he would vote against the motion because of concerns about how some provisions would negatively affect Nebraska businesses.
In a statement after Monday's vote, however, he said "no one should view my vote today as an indication that I won't support the bill currently being negotiated by the Banking Committee."
Nelson is reportedly concerned about new federal jurisdiction over insurers as well as oversight of over-the-counter trading of derivatives. Warren Buffett's Berkshire Hathaway,which has both an insurance and reinsurance units, is headquartered in Lincoln, Nebraska.
Derivatives regulation has been an area of contention between Democrats and Republicans and may also be the issue on which the vote turns.
On Sunday, Dodd and his counterpart on the agriculture committee, Blanche Lincoln, reached a compromise agreement on derivatives. (CNBC.com has obtained a copy of the terms.)
The compromise measure came after Lincoln's panel last week passed a measure with tougher restrictions than Dodd's version and managed to secure the vote of a key Republican, Charles Grassley, in the process.
That compromise may also secure the vote of another key Republican, Olympia Snowe, who called for a tough approach to derivatives last Friday in a letter to Reid.
Republicans generally want any derivatives regulation to provide an exception for private companies, which may want to use the financial instrument as a hedge.
Though some Democrats are opposed to such an end-user exception, many are thought to be willing to accept it, as long the legislation creates a new market structure, including trading and clearing procedures.
Republicans are still unhappy about the powers of the a new consumer financial protection agency, which would oversee financial products, such as mortgages; and a new fee on banks that would help cover the government's bailout costs of a failing financial giant.
In addition, the GOP, as well as some Progressive Democrats, are worried the financial reform legislation does not do enough to protect taxpayers from future bailouts of big banks, insurers and other financial firms.