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Dems Win Big Financial Reform Vote

May 20, 2010 - by Donny Shaw

Having won over Sen. Scott Brown [R, MA] and having Sen. Arlen Specter [D, PA] back in the chamber to place his vote, the Democrats today found 60 votes and passed cloture on their financial reform bill. That means that a final vote on the bill requiring a simple majority of 51 votes must take place within the next 30 hours.

The bill, called the Restoring American Financial Stability Act of 2010, attempts to fix regulations of derivatives, create new consumer protections for financial products, and set up an orderly liquidation process for winding down failing systemically risky financial institutions to avoid future bailouts, and much more. A summary of the bill as filed (without the dozens of floor amendments that were added) can be found here (pdf). Mind you, some of the adopted floor amendments are significant.

All Republicans except Sen. Snowe [ME], Sen. Collins [ME] and Sen. Brown [MA] voted against the cloture motion. All Democrats except Sen. Cantwell [WA] and Sen. Feingold [WI] voted for it. The two Dems voting no don’t think the bill is strong enough and wanted to keep the debate open longer to vote on more strengthening amendments.

Majority Leader Harry Reid [D, NV] is allowing votes on only two more amendments — one from Sen. Sam Brownback [R, KS] that would exempt auto dealers from the new consumer financial protections in the bill, and one from Sen. Jeff Merkley [D, OR], a secondary amendment to the Brownback amendment, that would ban 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 in which they might have a “material conflict of interest.”

Maria Cantwell’s [D, WA] amendment stating that “any swap that is required to be cleared is unlawful unless the swap is cleared” will not get a vote. The amendment is designed to fix a loophole in the bill that would let banks ignore clearing requirements for derivatives without any repercussions, even if they have been told by regulators that they must conduct their trades through a clearinghouse. According to her office, Cantwell will continueworking to fix the loophole, but she doesn’t know how yet.

Once the bill has officially been approved by the Senate, it will have to be reconciled in conference committee with the House’s version of financial reform, H.R. 4173, before it can be sent to President Obama to be signed into law.

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