The two big items in the Senate right now -- the unemployment insurance extension and the financial reform bill -- are basically on hold until West Virginia Governor Joe Manchin appoints an interim replacement for the late Sen. Robert Byrd [D, WV]. The Democrats need a senator voting from Byrd's seat in order to reach the 60 votes they need to break Republican-led filibusters of these measures.
But it's sounding like the Dems will not have a replacement for Byrd when they come back next week. This afternoon on MSNBC, Gov. Manchin said that he will wait until after a special session of the West Virginia state legislature clarifies the law in regards to the next election to fill Byrd's seat before he appoints an interim replacement. Transcript and video are below.Read Full Article
UPDATE: Good news for all of you waiting for Congress to pass the unemployment insurance extension -- the AP is reporting that West Virginia Attorney General Darrell McGraw has issued the ruling that Gov. Manchin requested on whether he could hold a special election for Sen. Byrd's seat on the 2010 ballot. Manchin had said he would wait on the ruling before appointing an interim senator to fill the seat. As I reported below, the ruling wasn't expected until some time next week.
Now that the ruling is in, it's possible that Manchin will appoint a replacement before the end of the week so they they can be sworn in to the Senate on Monday. The interim senator is expected to give Senate Democrats the 60th vote they need to overcome a Republican filibuster of the unemployment insurance extension and move it forward towards becoming law.
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In their attempt to wrangle enough Republican votes to pass the financial reform bill, Democrats have dropped a $19 billion tax on big banks and hedge funds. Senator Scott Brown [R-MA] in particular raised objections to this provision, believing that the cost would be passed on to customers.Read Full Article
The conference committee worked through the night until 6 a.m. this morning to finalize their financial reform bill and, in particular, its critical language regulating the huge and risky over-the-counter derivatives market. I stayed awake until about 3:00 a.m., following along to the extent possible on C-Span and providing updates on Twitter, but I was asleep before any good info or analysis was really available. Now that we have some day-after reporting on what happened in those delirious early morning hours, after all but a handful of people had turned off C-Span, here's what it looks like went down.Read Full Article
The derivatives chapter in the Senate's financial reform bill is stronger than the House's version in just about every way imaginable. Not surprisingly, convincing finical reform conference committee members to choose the House derivatives language over the Senate language has been big-bank lobbyists' top priority in the past few weeks.
The vote on derivatives will take place tomorrow, and despite a lot of centrists recently adopting the banks' position, a trio of relatively moderate House Dems -- Rep. Rosa DeLauro [D, CT-3] (pictured), Rep. Bart Stupak [D, MI-1] and Rep. Jackie Speier [D, CA-12] -- are pushing back hard. They circulated a letter today urging the Senate derivatives language to be kept in tact and implying that any actions by the conference committee to weaken the language could cost Democratic votes from the left. They are asking for Democratic House colleagues to sign on.Read Full Article
Sen. Scott Brown [R, MA] has taken more money from the financial industry recently than 95% of the Senate despite having no official positions of power and not even being a member of the Banking Committee with jurisdiction over financial reform legislation. In May, Sen. Brown gave Democrats the 60th votes they needed to break a Republican filibuster of the financial reform bill. But now as the bill is going through the conference committee, he's using his leverage as a crucial swing vote to fight for carve outs that would benefit the financial companies who have been funding him.Read Full Article
For those willing to step into the weeds and follow what the financial reform conference committee is going to do next week on derivatives reform, this from Zach Carter at Alternet is an important addition to what we should be paying attention to:Read Full Article
Included among the financial reforms that may soon become law is an attempt to restrict the Fed's ability to bail out failing companies by changing a small but important paragraph in the Federal Reserve Act: section 13.3. 13.3 gives the Federal Reserve significant latitude in making emergency loans and is, for instance, what made possible the $29 billion loan to JPMorgan Chase in 2008. The financial reform bills passed by the House and Senate both include a number of additions and modifications to the paragraph, and whatever bill is eventually signed would likely significantly reduce the freedom of the Board to make such loans.Read Full Article
Yesterday, Sen. Blanche Lincoln [D, AR] issued a "term sheet" that her spokesperson said sought to clarify the intent of her proposal, Sec. 716, to ban derivatives desks at bank-holding companies from accessing federal subsidies via the Fed discount window and FDIC insurance. Most discussion of the term sheet was focused on the two-year phase-in proposal and a somewhat ambiguous study that would be required, but looking it over myself, I think it may be more of a gutting than a clarification.Read Full Article
On Wednesday, the House announced its list of thirty-one conferees, and like their Senate counterparts, the House conferees are bringing massive amounts of finance industry campaign contributions to the negotiating table. According to data from the Center for Responsive Politics, for the 2010 cycle alone, these representatives have collected an aggregate of $6,192,618, for an average of over $199,000 each. This number is substantially higher than for the House as a whole, where the average representative has received closer to $113,000, or over 40% less.Read Full Article
Sen. Blanche Lincoln's [D, AR] surprise primary win Tuesday has breathed new life into her financial reform provision to ban banks from getting government assistance for their derivatives and swap trading activities.
The provision, known as Sec. 716, is going to be at the center of the financial reform conference committee that starts today (live feed). It has generally been talked about as forcing banks to "spin off" their derivatives trading activities into separate entities, but that description makes it sound more aggressive than it actually is. This isn't a "break up the banks" provision. The new derivatives entity would still be an affiliate under the same parent company as the bank they were spun off from.
The real effect of Sec. 716 would be to put a firewall between regular commercial banking activities and risky derivatives trading, with banks continuing to have access to government assistance via FDIC insurance and the Fed's discount window on the commercial banking side, but without access to any government assistance for derivatives activities. The idea is to make sure taxpayers aren't liable for banks' risky derivatives trades when they go bad.Read Full Article
The financial reform conference committee kicks off tomorrow. This is where negotiators from the Senate and the House meet to iron out the differences between their versions of the bill and create a final text to be voted on one more time by both chambers.
Though the two versions of the bill are broadly similar (House version, Senate version), when looked at more closely there are dozens of hugely important details that will need to be resolved. For example, will the proposed Consumer Financial Protection Agency be independent, or will it be housed at the Fed and subject to Fed vetoes? Will there be a pre-funded orderly liquidation fund, or will the funds necessary for liquidating failing big banks be put up by the federal government when the time comes? Will banks be allowed to continue getting government backing for their derivatives trades, or will they be required to spin their derivatives activites off into separate entities without access to the Fed's discount window and FDIC guarantees?Read Full Article
Moderate Democrat Sen. Blanche Lincoln [AR] survived a tough run-off primary election Tuesday night against her challenger for the left, Arkansas Lt. Governor Bill Halter. Lincoln's victory tonight means that she will be on the ballot in the November general against Republican challenger Rep. John Boozman [R, AR-3].
So, what are the implication here for life under the dome, particularly with financial reform about to go into conferece committe on Thursday?Read Full Article
According to reports, Blanche Lincoln's tough provision requiring banks to "spin-off" their derivatives trading operations into separate entities that would not have access to discount Fed money and an FDIC guaranteeis going to be dropped next week by the conference commitee negotiating teh final financial reform bill. But the provision is giving reform advocates a chance to push once again for the almost-as-tough Merkley-Levin "Volcker Rule" amendment, which was blocked by Senate Republicans and bank lobbyists from even getting a vote during the Senate debate.Read Full Article
The Senate has selected their conferees to meet with the House on ironing out the differences between the two chambers' financial reform bills. It's a pretty standard list including members of the Banking and Agriculture Committees that had jurisdiction over the bill as it moved through the Senate. But, since the Senate's conferees have all been influential players on the issue, it means that they are bringing an unusually large amount of financial industry donations to the negotiating table.Read Full Article