Late Wednesday the Senate appeared ready to end a three-day standoff over consideration of a bill encompassing a sweeping reform of the financial regulatory system and move the measure to the floor for debate. Senate Banking Committee ranking Republican Richard Shelby of Alabama conceded that his negotiations with Chairman Chris Dodd, D-CT, aimed at getting concessions in advance had failed and released his fellow Republicans to vote their conscience.
Shelby’s statement came after Republicans at midday Wednesday defeated a third attempt by majority Democrats to invoke cloture and move to consideration of the bill. It was the third day that the block of 40 Republicans held firm and Democrats failed to muster the two-thirds or 60 votes necessary to bring the bill up for consideration (see Daily GPI, April 28; April 27). However, Senate Majority Leader Harry Reid, D-NV, indicated that he would continue to schedule votes, putting Republicans on the spot and making them appear to be defending Wall Street.
Republicans had fought to have their amendments wrapped into the bill before it went to the floor and a majority decision.
Shelby said “Chairman Dodd has assured me that he will address a number of concerns I have expressed with respect to ending bailouts. We have been unable, however, to make any meaningful progress on other important components of the legislation. It is now my belief that further negotiations will not produce additional results.
“I appreciate Chairman Dodd’s assurance that my concerns relating to ending bailouts will be included in his bill. I take him at his word. While these changes are significant and meaningful, they are not sufficient to garner my support for moving this bill to the Senate floor. Now that my negotiations with Chairman Dodd have reached an impasse, I thank my Republican colleagues for their support and defer to their individual judgments on whether the Senate begins a floor debate on this bill.”
Shelby said he objected to the provisions to rein in derivatives trading, saying the bill “as currently drafted would have far-reaching and devastating effects on these businesses and our economy, increasing the cost of nearly every product we use and negatively impacting job growth.”
On Wednesday Democrats fell four votes short (56-42) of reaching the necessary 60 to invoke cloture and proceed with a limited debate on the bill (S. 3217). Democratic Sen. Ben Nelson of Nebraska continued his opposition to the legislation, with Democrat Robert Byrd of West Virginia and Republican Robert Bennett of Utah not casting votes. In a purely procedural move, Majority Leader Reid voted “no” so that he could move to reconsider and set the stage for a fourth cloture vote on Thursday.
Republicans had maintained they could not support the bill without “ironclad protection” ensuring that taxpayers will not have to bail out Wall Street firms in the future, said Senate Minority Leader Mitch McConnell of Kentucky Wednesday.
He noted that a number of utilities in his state, which use over-the-counter (OTC) derivatives, are concerned that this “bill could really hurt them.”
Dodd had urged Republicans to at least allow the bill to come to the Senate floor for debate and amendments. “A filibuster is ongoing here,” and the only way to break it is 60 votes, he noted. Democrats need all of their 59 members and one Republican to cross the aisle to invoke cloture.
“I expect that if we get on [with] this bill, we’re going to be here for several weeks,” said Dodd, the chief architect of S. 3217.
The broad financial regulatory reform bill, which was voted out of the Senate Banking Committee in March (see Daily GPI, March 24), includes a measure that would regulate the $600 trillion opaque derivatives market for the first time. The OTC derivatives bill was approved by the Senate Agriculture Committee on April 21 and then folded into the broader banking committee bill (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.
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