House and Senate negotiators took the report on sweeping financial regulatory reform back into conference Tuesday to make adjustments to obtain the 60 votes needed to head off a filibuster in the Senate.

Democratic leaders took this unusual step to stem the loss of support for the bill this week. “The Democrats are putting on the table a proposal to shut down TARP [Troubled Asset Relief Program] and any unused TARP authority will be counted toward offsetting the cost of the bill. Taxpayers will never again be on the hook for paying for the costs of any future bank failures,” said a House Democratic aide.

Once the adjustments are made to the House-Senate conference report that was issued last Friday, he said the House could take up the amended conference report as early as Wednesday.

But it appears unlikely that Democrats will be able to send the financial reform bill to President Obama before leaving for their Fourth of July recess. The passing of Sen. Robert Byrd (D-WV) has upset the schedule.

Byrd’s death “likely delays consideration of the financial reform measure in the Senate until the week of July 12,” said energy analyst Christine Tezak of Robert W. Baird & Co. And it’s still uncertain whether the changes being made to the conference report will be enough to win over the Senate detractors.

The conference report is expected to easily be voted out of the House, but it will face hurdles in the Senate (see Daily GPI, June 28). The passing of Byrd means the Senate has one less Democrat to support the bill, which was brought to the floor last month only when three Republicans joined Democrats to obtain the 60 votes needed to end debate (see Daily GPI, April 28).

“Byrd’s death [has] left Senate Democrats with 58 members in their caucus, two shy of the 60 needed to end debate on the bill [and bring it to the floor]. The two Democrats who opposed the legislation in May — Russ Feingold of Wisconsin and Maria Cantwell of Washington — appeared unlikely to reverse their stance, leaving Senate Majority Leader Harry Reid (D-NV) with just 56 likely Democratic supporters,” CQ Today reported (see Daily GPI, May 20).

“My test for the financial regulatory reform bill is whether it will prevent another crisis. The conference committee’s proposal fails that test and for that reason I will not vote to advance it,” Feingold said Monday.

Democrats will need the support of a few Republicans to get the conference report through the Senate. However, the handful of Republicans who voted in favor of the bill in late May are said to be reconsidering their position. The bill, which contains contentious derivatives provisions, cleared the Senate by a partisan vote of 59-39 (see Daily GPI, May 24).

Sen. Scott Brown (R-MA) said he may now vote against the bill. “I was surprised and extremely disappointed to hear that $18 billion in new assessments and fees were added in the wee hours of [last Friday] by the conference committee. While I’m still reviewing the bill’s details, these provisions were not in the Senate version of the bill which I previously supported…I’ve said repeatedly that I cannot support any bill that raises taxes,” he noted.

Two Maine Republicans — Sens. Olympia J. Snowe and Susan Collins — voted for the regulatory reform bill in May, but are now said to be unhappy with certain provisions in the report.

Sen. Charles Grassley (R-IA) also voted for the financial reform bill in May. He has not indicated whether he supports the conference report.

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