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With No GOP Support, Dems Mull Options for Passing Financial Reform

March 31, 2010 - by Donny Shaw

When financial reform negotiations broke down a couple weeks ago, Sen. Bob Corker [R, TN] (pictured at right) was the one to stand up and say that a bipartisan bill was still possible. Last week, when the Republicans refused to participate in the mark-up of the bill, Corker called it “a very large strategic mistake,” adding that financial reform “is an issue that almost every American wants to see passed.”

But that doesn’t mean he’ll vote for it:

Republican Sen. Bob Corker said Tuesday he “absolutely cannot support” a bill written by Senate Democrats to overhaul financial regulations unless changes are made, clouding the outlook for a bipartisan measure.

“I couldn’t support the bill in its current form,” Mr. Corker said in an interview with The Wall Street Journal. “I am absolutely not throwing in the towel. I have no plans to support the current legislation. I hope we’ll get back to the negotiating table.”

Senate Democrats, as we know, need to pick off at least one Republican, in addition to holding their own party together, to overcome an inevitable Republican filibuster. They have basically three options — find a Republican other than Corker who may be willing to vote for the bill, negotiate down some of the provisions to a point that Republicans can support it, or call the Republicans’ bluff and just bring the bill to a vote.

The only other GOP senator that has given any indication of favoring financial reform along the lines of the Democrats’ proposals is Sen. Olympia Snowe [R, ME]. Snowe, who has a more moderate voting record than Corker, sent a letter to Banking Chairman Sen. Chris Dodd [D, CT] along with three Democrats calling for the bill to include strong regulations of the over-the-counter derivatives market. Specifically, the letter suggested that all OTC derivatives be traded on exchanges and be cleared by a certified clearinghouse unless the CFTC grants an exemption “based on a public interest or necessity finding.”

Last week, Snowe, who isn’t in the Banking Committee, told HuffPo that “she looked forward to playing a central role in negotiations,” once the bill was out of committee.

The second route for the Democrats would be to bend the bill in the direction of the Republican senators who have expressed interest in some form of financial reform along the way, like Corker and Sen. Richard Shelby [R, AL]. According to Brookings’ Doug Elliot, if they have to use that strategy, it will likely focus on the Consumer Financial Protection Agency. “There will be no Republican support for the Senate bill without further watering down of the CFPA,” Elliott told Brian Beutler at TPM.

As it stands right now, the CFPA in the bill is already severely weakened in the Senate bill. The agency would be housed within the Federal Reserve, rather than being independent like the CFPA envisioned by Obama and passed by the House. Independence is really at the heart of the CFPA idea. Othe regulators, including the Fed, already have consumer protection powers, but they generally take a back seat to regulations designed to protect the markets.

The third option is to just take what Dodd has produced and bring it to the Senate for a vote. Financial reform polls very well with the public, and it actually seems more popular the stronger it is. The Republicans likely do not want to actually have the failure to enact regulatory reform in teh wake of teh largest financial crisis in 80 years on their hands.

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