Bank-regulation bill headed for Senate fight
By Jim Kuhnhenn
WASHINGTON – Republicans abandoned their effort to alter Wall Street regulatory legislation in a key Senate committee yesterday, leaving the fight for the full Senate, and clouding prospects for a bipartisan bill.
Republicans had offered more than 300 amendments to legislation proposed by Senate Banking Committee Chairman Christopher Dodd, but they withdrew them over the weekend. That cleared the way for a quick party-line vote yesterday: The committee approved Dodd’s bill, with the 13 Democrats in favor and the 10 Republicans opposed.
The surprise development by the committee’s Republicans did nothing to mend the partisan fissures over the legislation and adds more uncertainty to Congress’ ability to pass a sweeping rewrite of financial regulations this year. The full Senate would take up the bill in April at the earliest.
“You’ll have Easter recess, and that’s when, I guess, over the course of the next several weeks . . . the real negotiations will be taking place,” said Sen. Bob Corker (R., Tenn.), a member of the committee who had held negotiations with Dodd.
Dodd unveiled his bill on March 15, 18 months after Wall Street’s failures helped plunge the U.S. into the worst recession since the 1930s. The legislation would give the government unprecedented powers to split up firms so large that they are considered a threat to the economy, put together a council of regulators to watch for risks in the financial system, and create an independent consumer watchdog.
With more than 300 Republican amendments and nearly 100 Democratic changes, committee members had prepared themselves for a long and arduous week of debate and votes on the bill.
Dodd did accept 25 Democratic amendments, including one sought by Federal Deposit Insurance Corp. chairwoman Sheila Bair that she said would prevent unintended bailouts of large financial institutions.
Democrats and Republicans are split over the need for an independent consumer entity. But other issues also divide the parties, including how to regulate complex trading instruments, such as derivatives, and what firms should be exempt from new rules. (Derivatives, securities whose value is based on underlying assets, were at the root of the financial system’s 2008 meltdown.)
Industry lobbyists said the decision to move swiftly through committee made it much more difficult to predict what the full Senate would ultimately do with the legislation.
Corker suggested that the bill, the subject of months of negotiations by Dodd and members of his committee, needed a new environment.
“It’s probably true that we have a better opportunity with a different cast of characters, the full Senate, to do something that is sound policy-wise,” Corker said.