Financial overhaul goes to full Senate

Party-line vote fuels uncertainty about passage

‘We will have re- form this year,’ said Senator Chris Dodd, chairman of the Senate Banking Committee. ‘We will have re-
form this year,’ said Senator Chris Dodd, chairman of the Senate Banking Committee.
By Jim Kuhnhenn
Associated Press / March 23, 2010

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WASHINGTON — Democrats sent a massive Wall Street regulation bill to the full Senate on a party-line vote yesterday that left the bill’s chances for bipartisan passage in doubt.

In a surprise move over the weekend, Republican members of the Senate Banking Committee jettisoned about 300 amendments they had planned either as an effort to put their imprint on the bill or to delay it. Senators on the committee had been expecting a long week of votes and debate, only to find themselves voting as they were still easing into their seats.

Despite a conciliatory tone struck by the committee’s Democratic and Republican leaders, the development adds more uncertainty about Congress’s ability to pass a sweeping rewrite of financial regulations this year. The Senate would not take up the bill until next month, at the earliest.

In opening remarks before the committee vote, Chris Dodd of Connecticut, committee chairman, and the panel’s top Republican, Senator Richard Shelby of Alabama, chose to sound optimistic about the bill’s prospects.

“We will have reform this year,’’ Dodd said. “I just don’t believe we’re quite there yet,’’ Shelby cautioned.

Dodd unveiled his bill last week, 18 months after Wall Street’s spectacular failures helped plunge the nation into the worst recession since the Great Depression. The measure would give the government unprecedented powers to split up companies considered a threat to the economy, put together a council of regulators to watch for risks in the financial system, and create a consumer financial watchdog.

Shelby said seeking changes in committee would have been pointless.

Dodd did accept 25 Democratic amendments, including one sought by the Federal Deposit Insurance Corp.’s chairwoman, Sheila Bair, that she said would prevent unintended bailouts of financial institutions.

Democrats and Republicans are split mostly over the need for an independent consumer-protection entity. But other issues divide the parties, including how to regulate complex trading instruments and what firms should be exempt from new rules.

Industry lobbyists said the decision made it much more difficult to predict what the Senate ultimately would do. Without the support of at least one Republican, the measure would be blocked on the Senate floor by procedural delays that require 60 votes to overcome; Democrats control 59 votes in the Senate.

Democrats could seek to corral one or two Republicans who are willing to support it and break any filibuster. Alternatively, a Republican could emerge to strike a bargain and change the bill so that it would garner bipartisan support. That is what happened last year with legislation that changed credit card rules.

“There is no choice other than a bipartisan compromise solution,’’ said Senator Evan Bayh, Democrat of Indiana.

The Obama administration kept up the pressure on Congress, with Treasury Secretary Timothy Geithner declaring yesterday that the country faces a “defining moment’’ in the battle to overhaul financial oversight.

“The test we face is whether we can enact real reforms that provide strong protection for consumers, strong constraints on risk-taking by large institutions, and strong tools to protect the economy and taxpayers from future crises,’’ Geithner said in remarks to the American Enterprise Institute, a conservative think tank.

“We will not accept a bill that does not meet that test,’’ Geithner said.