Endgame Begins -- Where Things Stand on Financial ReformMay 17, 2010 - by Donny Shaw
As expected, Senate Majority Leader Harry Reid [D, NV]has filed for cloture on the financial reform bill, setting up the possibility of a Wednesday vote on ending the debate and forcing an up-or-down vote on passage.
For financial reform advocates, this is mixed news. On the one hand, the bill that Reid is filing cloture on is stronger than what anyone had really expected the Senate to produce. Blanche Lincoln’s tough derivatives language is still mostly in tact, strengthening amendments regarding debit fees, ratings agencies and auditing the Fed have been adopted, and every attempt to weaken the bill so far has been beaten back. On the other hand, some of the most important strengthening amendments haven’t been voted on yet and may not get voted on if cloture is approved on Wednesday.
Reid and Senate Banking Committee Chairman/financial reform floor manager Sen. Chris Dodd [D, CT] are trying to quit while they are ahead. If they can get cloture, they know they have a political winner on their hands. If they can’t get cloture, they face the threat of amendments like the one from Sen. Sam Brownback [R, KS] to make auto dealers exempt from new consumer financial protections and one from Sen. Thomas Carper [D, DE] to make federal regulation preempt federal regulations. Dodd an Reid have vowed to hold cloture votes on the bill every day until they can the motion approved.
At this point, it seem likely that the cloture vote will be rejected on Wednesday. Sen. Byron Dorgan [D, ND] is threatening to vote against cloture because he hasn’t been given a vote on his amendment to ban naked credit-default swaps. Reid and Dodd need all 59 Democrats plus at least one Republican to vote for cloture if it is to pass.
Right now, hundreds of amendments are still sitting without votes, but there are a few major structural ones that people are paying particular attention to. If any of these are adopted, Senate Dems will likely line up behind the bill and move to approve cloture and move the bill forward to final passage.
- S.AMDT.3739 from Sen. Sheldon Whitehouse [D, RI] — This amendment would basically undo a Supreme Court ruling from ’78 that said that banks and credit card companies only had to follow the lending law of the state they are officially incorporated in, not those they do business in. This is why most of the big credit-card-issuing companies are technically based in South Dakota — because there is no cap on interest rates there. The Whitehouse amendment states that the interest rates on credit transactions “may not exceed the maximum permitted by any law of the State in which the consumer resides.” It has 15 co-sponsors — 14 Democrats plus Sen. Thad Cochran [R, MS].
- S.AMDT.3884 from Sen. Maria Cantwell [D, WA] — This would essentially reinstate the Glass-Steagall Act’s mandatory firewall between commercial banks and investment banks that was repealed by the Gramm-Leach-Bliley Act of 1999. The repeal of Glass-Steagall has been blamed for causing the too-big and too-interconnected problems that necessitated the 2008 bank bailout. The amendment would force the separation of commercial and investment banks by stating that nobody employed at a bank dealing in stocks, bond and securities can simultaneously be employed at a commercial banking company. It contains an important exemption: if the Federal Reserve says it’s okay, investment banks and commercial banks can share employees, or even CEOs. The amendment has the support of 4 Democratic co-sponsors and Sen. John McCain [R, AZ].
- S.AMDT.3739 from Sen. Jeff Merkley [D, OR] — The one would put some teeth on the “Volcker rule” in the underlying bill by banning banks from proprietary trading — investing their own money for profit rather than their clients money — and making it illegal for them to get into any securities transaction win which their could be a “material conflict of interest.” This one has 21 Democratic co-sponsors.
Image from Jobs with Justice used under a CC license.