Wall Street kept its head above water Tuesday as Senate Democrats failed once again to get the 60 votes necessary to overpower Republican opposition and move on to a debate of proposed sweeping legislation to reform the financial regulatory system.
Tuesday’s vote was the second time in two days that Democrats failed to invoke cloture and avoid a filibuster. The Senate’s 40 Republicans stood together and picked up a Democratic vote, again Sen. Ben Nelson of Nebraska. That followed on a 58-41 vote on Monday (see Daily GPI, April 27). Senate aides said earlier on Tuesday that if the second vote failed, they would try again on Wednesday.
Majority Leader Harry Reid, D-NV, confirmed as much Tuesday afternoon. “There will be more votes to proceed to debate this week, and Republicans will have more opportunities to show whose side they are truly on,” he said.
Capitol Hill watchers said that with sentiment across the country strongly in favor of clamping down on Wall Street, Democrats have no problem with having Republicans go on the record repeatedly as obstructing reform.
The broad financial regulatory reform bill, which was voted out of the Senate Banking Committee in March (see Daily GPI, March 24), would include a measure that would regulate the $600 trillion opaque derivatives market for the first time. The over-the-counter (OTC) derivatives bill was approved by the Senate Agriculture Committee on April 21 (see Daily GPI, April 22).
The agriculture panel’s legislation seeks to curb commodities market speculation by forcing OTC derivatives trades onto regulated exchanges and clearinghouses. It makes an exemption to the trading/clearing requirement for large commercial traders who use derivatives to hedge the risk associated with trading of physical products.
The bill includes a provision that would significantly restrict the trading of large banks — such as JPMorgan Chase & Co. and Goldman Sachs Group — by forcing them to spin off their lucrative derivatives trading operations.
Speaking on the Senate floor Tuesday morning regarding the Republican blockade of an open debate on Wall Street accountability legislation, Reid said the “American people undeniably demand that we protect them from a Wall Street run wild. Two-thirds of Americans support us cracking down on big bankers’ reckless risk-taking…and a majority supports us asking banks to pay for their own funerals — that’s the fund financed by the big financial firms to cover the cost of their liquidation…not to bail out banks that threaten the larger economy, as some have mischaracterized it, but to shut them down for good.”
Reid added that the American people also demand that their leaders discuss these details and improve on these ideas, noting that U.S. citizens have two “simple” requests: “One, that their leaders look out for their economic security; and two, that their legislators legislate. In other words, they want us to look out for their jobs and they want us to do our own. Right now, Senate Republicans are refusing to do either.”
In opposing the bill, Senate Republican Leader Mitch McConnell of Kentucky said the legislation isn’t “ready for prime time. We know this because every day, it seems, another one of its flaws comes to light.”
McConnell added that community bankers believe that the bill will hurt Main Street, not Wall Street, and that companies from Harley Davidson to eBay have expressed their concerns about the legislation’s effect on their businesses.
“Clearly, this bill isn’t finished,” McConnell said. “It falls short of our constituents’ demands to prevent future bailouts, and it’s expected to hurt America’s job creators at a time when we need jobs most.”
Reid said the purpose of open debate is to work out any kinks. “We want to bring our bill to the floor so we can discuss it, debate it, amend it and improve it,” he said. “We want to do it out in the open. After all, if we are not debating — if senators refuse to let the Senate do its job — what are we doing here?”
As the only Democrat to truly vote “no,” Nelson said he needs more information. “I cannot support proceeding on a bill I haven’t seen, but no one should view my vote today as an indication that I won’t support the bill currently being negotiated by the Banking Committee,” he said. “I look forward to seeing what the committee develops on a bipartisan basis with Republicans; then I will have something concrete to consider.”
Nelson added that “we need to regulate Wall Street without doing harm to Main Street,” noting that he is “hearing from Main Street businesses in Nebraska that have concerns about the current bill adversely impacting them. Clearly, though, Wall Street’s reckless behavior that nearly destroyed our economy must be reined in.” The largest businessman in Nelson’s state is billionaire investor Warren Buffett, who reportedly failed to gain Democratic support to put a provision in the bill that would have averted a financial hit for Buffett’s Berkshire Hathaway conglomerate.
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