Sen. Bernie Sanders [I, VT] yesterday forced a vote on an amendment on breaking up the big banks in the Budget Committee mark-up of the 2011 budget resolution. The amendment didn't pass, but it came closer than I think even Sanders expected. It was rejected on a 12-10, bipartisan vote, which Sanders in a press release called "a strong signal of the growing momentum behind proposals to dismantle financial institutions that dominate the U.S. economy."Read Full Article
Senate Majority Leader Sen. Harry Reid [D, NV] filed for cloture on the financial reform bill today, meaning that the Senate can move forward with a vote to begin debating on Monday. Under Senate rules, if there is an objection to a unanimous consent request to bring up a bill for floor debate, as is the case with the financial reform bill, at least 16 senators must sign and file a cloture petition on the motion to proceed to the bill. After 30 hours, the Senate can vote on whether or not to invoke cloture. The cloture vote is set for Monday, April 26 at 5:00 p.m. ET and will require a supermajority of 60 votes to pass.Read Full Article
The Congressional Budget Office has released their "score" for the financial reform bill (a.k.a. the Restoring American Financial Stability Act of 2010), and it looks like more good news for the Dems. Reuters reports:Read Full Article
There has been an ongoing partisan spat in the Senate recently over whether or not the financial reform bill as prepared by Sen. Chris Dodd [D, CT] would actually end bailouts. Politifact has shown that Minority Leader Sen. Mitch McConnell's [R, KY] statement that the bill "actually guarantees future bailouts of Wall Street banks" is false, but there is more ambiguity over whether the resolution authority provision in the bill is actually strong enough to guarantee that there will never again be bailouts of too-big-to-fail banks.
Sens. Sherrod Brown [D, OH], Ted Kaufman [D, DE], Bob Casey [D, PA] and Sen. Sheldon Whitehouse [D, RI] today announced that they are proposing legislation that I think everyone can agree would end once and for all the problem of having to bailout failing banks that are too big to fail.Read Full Article
One of the great political success stories of the past couple years has been the audit the Fed movement. Starting with an unlikely partnership between the far-right Rep. Ron Paul [R, TX-14] and far-left lawmakers Rep. Alan Grayson [D, FL-8] and Sen. Bernie Sanders [I, VT], the push to open up the Federal Reserve to a complete government audit for the first time ever (H.R.1207) has attracted more than 300 co-sponsors in the House and was included in the House's financial reform bill that was approved last December.
But now that financial reform has moved into the Senate, the audit the Fed proposal has disappeared from the bill and there is virtually no talk of trying to put it back in. Instead, the Senate financial reform bill as written by Banking Committee Chairman Chris Dodd [D, CT] includes a section that looks deceptively like a Fed audit, but would actually do nothing to open up the Fed or remove the special audit restrictions that have allowed the Fed to operate in secrecy for decades.Read Full Article
The big Wall Street reform bill (S.3217) could hit the Senate floor as soon as next week. The legislative pieces are falling into place, the White House is staking out its position and the Republicans are firming up commitments of opposition from their more moderate members. Here's a roundup of the latest financial reform news out of the Senate.Read Full Article
The Democrats really do seem to have a new fire behind them as they are starting to take up financial reform. Yesterday, we heard that Sen. Blanche Lincoln [D, AR] of all people would be leading the Democrats on a tough derivatives reform bill. Today, Banking Committee Chairman Sen. Chris Dodd [D, CT] took to the Senate floor and unhesitatingly fought back at Minority Leader Sen. Mitch McConnell's [R, KY] false claims that the financial reform bill would lead to endless bank bailouts. Here's the video:Read Full Article
Yesterday, Sen. Blanche Lincoln [D, AR] surprised just about everyone (including yours truly) by announcing that her derivatives bill was going to be stronger than anything we've seen from Dodd, the House of Representatives, or the White House. Felix Salmon has a helpful post clearing up some confusion between exchange trading and clearing requirements, and outlining what we can expect in her bill, which will officially drop tomorrow:Read Full Article
Senate Minority Leader Mitch McConnell [R, KY] went before the Senate this morning and repeated a line from Frank Luntz's financial reform talking points memo that the Democrats' financial reform bill would lead to endless taxpayer bailouts of the big financial firms. Ezra Klein does a good, realistic debunking:Read Full Article
Benjamin Sarlin has a great piece at the Daily Beast on the state-of-play of derivatives reform now that it's moving under the jurisdiction of Sen. Blanche Lincoln [D, AR] and the Agriculture Committee.
He has a Lincoln staffer is on record saying that the derivatives bill she's writing, which will be dropped in the next couple weeks, will at least require all derivatives to be traded publicly on exchanges. That's a relatively big deal in that it tells us where we should be watching for possible derivatives dealer (a.k.a. the big banks) giveaways, namely in clearing exemptions and margin requirements for swaps that are exempt from clearing. We already know that Lincoln is planning to put exemptions for "end-users" in her bill. If it's anything like the House bill, up to half of all swaps could be exempt from clearing.Read Full Article
Politico reports that some Democrats are preparing a big push to strengthen financial reform legislation when it comes to the Senate floor in a couple weeks:
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A group of Democrats, joined by Senate Majority Whip Dick Durbin of Illinois, are planning an aggressive spring offensive to strengthen key provisions of the financial reform bill - and daring Senate Republicans to vote against them.
"The banks -- hard to believe in a time when we're facing a banking crisis that many of the banks created -- are still the most powerful lobby on Capitol Hill. And they frankly own the place." - Sen. Dick Durbin [D, IL].
In a few weeks, the banks' "ownership" of Congress will be put to the test. The Senate is going to take up comprehensive financial regulatory reform legislation in May -- this is the main bill the banks are spending their political capital on to fight, and the Senate is where they are hoping to use their influence and make it friendlier to their business.Read Full Article
Sen. Richard Shelby [R, AL], who just two weeks ago said that "safety and soundness [of banks] trumps...the consumer finance whatever," is all of a sudden championing a stand-alone Consumer Financial Protection Agency (CFPA), the Washington Post reports:
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Staff members for Sen. Richard C. Shelby (Ala.), the ranking Republican on the Senate banking committee, sent a proposal to their Democratic counterparts last week that would create an independent consumer financial protection agency, according to sources familiar with the negotiations.
Derivatives, those obscure financial products built off the value of other assets, have their historical roots in agriculture. Farmers and investors would place bets against the harvest as a way to hedge against the uncertainty involved in making your living off of raising food. The derivatives market is now a several hundred trillion dollar, highly complex financial market, but the congressional agricultural committees still hold legacy jurisdiction over regulating it.
TNR's Noam Scheiber has a great piece on the state of financial reform in the Senate, describing an emerging strategy to put some relatively strong consumer protections in the bill while giving Wall Street much of what they want in areas that the public isn't paying attention to. Derivatives reform -- or the lack therof -- is likely going to be the area where Wall Street gets their biggest win, and the Senate Agriculture Committee is set up to be the driving forces behind delivering it.Read Full Article
Now that health care is done, the next big issue Congress will take up is reforming regulations of the financial market. Most of the attention paid to financial reform so far has been on two areas -- addressing the problem of too big to fail and consumer protections for financial products. Both important, but there's a lot more to the bill that people aren't talking about.
For example, the bill is expected to at least partially reverse the Commodity Futures Modernization Act of 2000 and restore some transparency to the over-the-counter derivatives market. Sounds arcane, but it's actually a really big deal and it goes to the heart of what turned a mortage crisis into a systemic financial crisis in 2008.
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