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Democrats Try to Split GOP on Banking Reform
With no bipartisan deal on how to rein in Wall Street, Democrats stepped up their efforts to splinter unified Republican opposition to their sweeping regulatory overhaul.
In a move that could attract the support of at least two Republicans, Democratic Sen. Christopher Dodd, the chairman of the Senate Banking Committee, agreed to toughen his sweeping bill with rules on derivatives despite objections from the Obama administration, according to a Democratic official familiar with the negotiations.
Derivatives are the complex securities blamed for helping precipitate the 2008 Wall Street crisis.
The Senate's top negotiators on financial overhaul legislation said Sunday they were not optimistic about striking a bipartisan agreement on key features of the sweeping bill before a showdown vote on Monday.
The restrictions adopted by Dodd were written and approved by the Senate Agriculture Committee last week. They include a requirement that banks spin off their derivatives businesses into subsidiaries with separate sources of capital. Banks fiercely opposed the provision. The Obama administration has called for banks to end trading in speculative securities, but not to jettison operations that create derivatives markets for clients.
The Agriculture Committee language had the support of Republican Sens. Charles Grassley of Iowa and Olympia Snowe of Maine. It was sponsored by Democratic committee chairwoman Blanche Lincoln, who pressed Dodd to incorporate it into the broader bill.
It was unclear Sunday night whether adding the derivatives restrictions would be enough for Snowe and Grassley to join Democrats and vote to permit the start of debate on the larger Wall Street bill.
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Senate Republican Leader Mitch McConnell on Friday blocked Democrats' efforts to bring the bill up for debate, setting up a vote Monday that will require 60 votes to move ahead. McConnell said Sunday that if Republicans did not strike a deal with Dodd on several aspects of the bill, all 41 Republican senators would vote to delay the start of debate.
Dodd and Sen. Richard Shelby, the top Republican on the banking committee, professed to be close to a deal Sunday during a joint appearance on NBC's "Meet the Press." But, as Shelby said, "inches sometimes are miles."
And the two lawmakers did not hold a negotiating session Sunday.
The legislation, the most sweeping effort to rein in financial institutions since the Great Depression, is approaching its end game, and Republicans and Democrats alike predict it can ultimately pass with bipartisan support.
But for now, Republicans are using what leverage they have in hopes of putting a bigger GOP imprint on the bill or removing Democratic provisions they perceive as government overreach.
Democrats said they were out of patience.
"Are we going to start the debate or are we going to shut it down and continue negotiating, negotiating, negotiating?" Democratic Sen. Sherrod Brown said on ABC's "This Week."
The new derivatives provisions would require most derivatives to go through a new network of clearinghouses and be traded on regulated exchanges. Lincoln's bill provides some exemptions for firms that use derivatives for commercial purposes to hedge against market fluctuations. It also exempts derivatives linked to foreign exchange rates.
Derivatives are financial products such as corn futures or stock options whose worth depends on the values of underlying investments. Companies use them to hedge against risks, but they have also been vehicles for speculation and helped trigger the financial crisis when the underlying investments - mortgage-backed securities, for example - plunged in value.
The overarching Senate bill - and a similar bill passed by the House - would create a mechanism for liquidating large firms, set up a council to detect systemwide financial threats, and establish a consumer protection agency to police lending. The legislation also would require derivatives, blamed for helping precipitate the meltdown, to be traded in open exchanges.
Even if Democrats are unable to proceed to debate after Monday's vote, Senate Majority Leader Harry Reid intends to keep pressure on Republicans. The political environment favors Democrats. Polls show a public desire to regulate financial institutions, and a recent fraud lawsuit against Goldman Sachs has created a desire by several Republicans not to be seen as obstructing Wall Street legislation.
"If you listen carefully to the tone in Washington, just sort of the last couple of days, I think there has been a substantial shift," Treasury Secretary Timothy Geithner said on CNN's "Fareed Zakaria GPS" program Sunday. "And I think really on balance there are a very substantial number of Republicans who want to be for a strong set of reforms."
Dodd has already incorporated a number of Republican ideas into his version of the bill following negotiations with Shelby and Republican Sen. Bob Corker. Democrats, particularly liberals, have become increasingly worried that a compromise with Shelby will limit their ability to amend the bill during floor debate.
Dodd offered them reassurances on Sunday.
"We can't take care of everything in the bill," he said, referring to his talks with Shelby. "Obviously our colleagues will want to be heard."
© 2010 CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report. In a move that could attract the support of at least two Republicans, Democratic Sen. Christopher Dodd, the chairman of the Senate Banking Committee, agreed to toughen his sweeping bill with rules on derivatives despite objections from the Obama administration, according to a Democratic official familiar with the negotiations.
Derivatives are the complex securities blamed for helping precipitate the 2008 Wall Street crisis.
The Senate's top negotiators on financial overhaul legislation said Sunday they were not optimistic about striking a bipartisan agreement on key features of the sweeping bill before a showdown vote on Monday.
The restrictions adopted by Dodd were written and approved by the Senate Agriculture Committee last week. They include a requirement that banks spin off their derivatives businesses into subsidiaries with separate sources of capital. Banks fiercely opposed the provision. The Obama administration has called for banks to end trading in speculative securities, but not to jettison operations that create derivatives markets for clients.
The Agriculture Committee language had the support of Republican Sens. Charles Grassley of Iowa and Olympia Snowe of Maine. It was sponsored by Democratic committee chairwoman Blanche Lincoln, who pressed Dodd to incorporate it into the broader bill.
It was unclear Sunday night whether adding the derivatives restrictions would be enough for Snowe and Grassley to join Democrats and vote to permit the start of debate on the larger Wall Street bill.
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Senate Republican Leader Mitch McConnell on Friday blocked Democrats' efforts to bring the bill up for debate, setting up a vote Monday that will require 60 votes to move ahead. McConnell said Sunday that if Republicans did not strike a deal with Dodd on several aspects of the bill, all 41 Republican senators would vote to delay the start of debate.
Dodd and Sen. Richard Shelby, the top Republican on the banking committee, professed to be close to a deal Sunday during a joint appearance on NBC's "Meet the Press." But, as Shelby said, "inches sometimes are miles."
And the two lawmakers did not hold a negotiating session Sunday.
The legislation, the most sweeping effort to rein in financial institutions since the Great Depression, is approaching its end game, and Republicans and Democrats alike predict it can ultimately pass with bipartisan support.
But for now, Republicans are using what leverage they have in hopes of putting a bigger GOP imprint on the bill or removing Democratic provisions they perceive as government overreach.
Democrats said they were out of patience.
"Are we going to start the debate or are we going to shut it down and continue negotiating, negotiating, negotiating?" Democratic Sen. Sherrod Brown said on ABC's "This Week."
The new derivatives provisions would require most derivatives to go through a new network of clearinghouses and be traded on regulated exchanges. Lincoln's bill provides some exemptions for firms that use derivatives for commercial purposes to hedge against market fluctuations. It also exempts derivatives linked to foreign exchange rates.
Derivatives are financial products such as corn futures or stock options whose worth depends on the values of underlying investments. Companies use them to hedge against risks, but they have also been vehicles for speculation and helped trigger the financial crisis when the underlying investments - mortgage-backed securities, for example - plunged in value.
The overarching Senate bill - and a similar bill passed by the House - would create a mechanism for liquidating large firms, set up a council to detect systemwide financial threats, and establish a consumer protection agency to police lending. The legislation also would require derivatives, blamed for helping precipitate the meltdown, to be traded in open exchanges.
Even if Democrats are unable to proceed to debate after Monday's vote, Senate Majority Leader Harry Reid intends to keep pressure on Republicans. The political environment favors Democrats. Polls show a public desire to regulate financial institutions, and a recent fraud lawsuit against Goldman Sachs has created a desire by several Republicans not to be seen as obstructing Wall Street legislation.
"If you listen carefully to the tone in Washington, just sort of the last couple of days, I think there has been a substantial shift," Treasury Secretary Timothy Geithner said on CNN's "Fareed Zakaria GPS" program Sunday. "And I think really on balance there are a very substantial number of Republicans who want to be for a strong set of reforms."
Dodd has already incorporated a number of Republican ideas into his version of the bill following negotiations with Shelby and Republican Sen. Bob Corker. Democrats, particularly liberals, have become increasingly worried that a compromise with Shelby will limit their ability to amend the bill during floor debate.
Dodd offered them reassurances on Sunday.
"We can't take care of everything in the bill," he said, referring to his talks with Shelby. "Obviously our colleagues will want to be heard."
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GOP: I DON'T WANNA!
Pass strong reform now. If you want to make reform even stronger, pass follow-up bills to do that
Look up campaign contributions for AIG, Fannie, Freddie, CountryWide, Leman Brothers & Goldman Sacks and you will find that 70-75% of all campaign contribution went to liberal/democrats for the last 20 years.
Posting this as a fact means that you MUST have already looked it up.
Why don't you share the source of your information with all of us?
Well there is the equal protection clause, and since the government didn't bail out everyone it would sure seem to be unconsitutional, right?
As part of the 14th amendment, the Equal Protection Clause prevents discrimination against INDIVIDUALS - not corporations.
The constitution doesn't apply to corporations - it is for individual rights. At least it used to be until the Supreme Corp savaged it with it's "to hell with the citizenry" rulings.
Louiville, the issue isnt what Starving wants to make it! The issue isnt what law prevents the Federal government from bailing out companies and individuals. The issue is what enumerated power in the Constitution gives the power to the Federal government ot bail out these folks.
The answer is that the Constitution gives them no such power.
If you would use your brain, you would see that the impending collapses of the financial sector and the automotive industry, BOTH threatened the stability of the United States as a nation.
If you think that the congress, senate, and the president overstepped their bounds by PROTECTING AMERICA, and our long term survivability, then you're even dumber than I already knew you to be.
When regulation is created, the lawyers figure out a way around them every time.
Really?
Then please explain the DECADES of financial stability that existed until Gramm, Leach, Bliley, etc, etc deregulated the entire industry.
While you're at it, please explain how S&L happened in the 1980's after Reagan did his part to deregulate it.
Republicans were in control of both houses in all of 2001 through the second week of January 2007. The Ratings Agencies were suppose to be the police. However Republicans point the finger at Democrats. Yet it is the Democrats who are stopping it to continue.
Answer: No. There is no relation between the two which could be found. They only share the same last name. So if anyone was wondering, I looked it up. You can too. This is the internet, just google it.
And that is why our political system does not work. We need to stop allowing private contributions to political parties.