April 28, 2010Senate Republicans unanimously voted again to block debate over legislation rewriting the rules of U.S. finance, embracing a strategy that party lawmakers argue will yield political and policy gains.
Democrats say yesterday’s vote, coming as Goldman Sachs Group Inc. executives were being questioned by a Senate panel, is a dangerous gamble for Republicans, given public anger over Wall Street and support for new regulations.
“This is political dynamite, and I think Republicans have lit the fuse,” Senator Robert Menendez, a New Jersey Democrat who heads the Democratic Senatorial Campaign Committee, told reporters.
Senate Republican leaders are pressing their 41 party members to stay united against the Democratic plan, saying that will give them maximum leverage to change key provisions in a bill calling for the biggest overhaul of financial rules since the 1930s.
“With 41 sticking together saying we need to continue the bipartisan negotiations, that is the leverage we have,” Senator John Cornyn, a Texas Republican, told reporters. “When we lose that we lose leverage.”
That argument worked yesterday for the second time in two days, as no Republican broke ranks to join Democrats in the 57- 41 vote preventing the floor debate from beginning. Sixty votes are needed to begin consideration of the bill.
Senate Majority Leader Harry Reid, who is pressing on with the test ballots in a bid to show that Republicans are standing in the way of an overhaul, vowed “there will be more votes this week.” A third vote may take place today.
No Amendments
The bill would strengthen rules governing the financial services industry to try to prevent a repeat of the $700 billion in taxpayer-funded aid Congress approved in 2008 to firms including Citigroup Inc. and Bank of America Corp.
Republican leaders say it isn’t likely they’ll be allowed to offer amendments on the floor, though Reid promised they could. That makes blocking the bill to continue the talks their best opportunity to modify the legislation, they say.
Senate Banking Committee Chairman Christopher Dodd, the Connecticut Democrat who wrote the bill, is negotiating toward a compromise with Alabama Senator Richard Shelby, the panel’s top Republican.
After yesterday’s vote, Dodd said he and Shelby made progress on one sticking point -- how to create a mechanism for unwinding failing financial firms. He and Shelby were down to “workable issues” on the provision, Dodd told reporters after meeting with Shelby.
Goldman Hearing
Among other changes, Republicans want to limit the regulation of derivatives and curtail the scope of a new consumer protection bureau.
Opposing the bill has become more troublesome in the wake of the Securities and Exchange Commission’s suit against Goldman Sachs alleging the firm defrauded investors when selling a debt instrument tied to mortgages. Goldman Sachs denied wrongdoing.
Members of both parties yesterday questioned Lloyd Blankfein, chairman and chief executive officer of the New York- based firm, and other executives in a Senate hearing that underlined the pressure lawmakers face from voters to rein in Wall Street.
“It’s hard to find a group who does take a positive view of banks and financial institutions at this point,” said Carroll Doherty, associate director of the Washington-based Pew Research Center for the People & the Press. “Even the Tea Party is just as negative about these institutions as everyone else.”
No More Bailouts
Republicans may have gained ground on one of their main objections to the bill, which they charge would set up a permanent bailout of Wall Street banks.
Dodd said he plans to support an amendment by Senator Barbara Boxer, a California Democrat, which would ban the government from using any taxpayer money for bailouts.
Negotiators remain farthest apart on the consumer financial protection bureau, the financial watchdog that would be housed in the Federal Reserve, Shelby said yesterday. Republicans would like to limit the scope of the agency, arguing that it could hurt small businesses.
Senate Republican Leader Mitch McConnell called the legislation a “dramatic overreach” into “every nook and cranny of American business.”
Republican strategists say that characterization feeds into a major campaign narrative for party candidates -- that Democrats are spending too much money on sweeping legislative proposals.
‘Wasteful Spending’
Ninety percent of voters said they were concerned with government spending, in a bipartisan Battleground poll conducted earlier this month by Lake Research Partners, a Democratic polling firm, and the Tarrance Group, a Republican firm. Almost half those surveyed said they thought Republicans would do a better job controlling the “wasteful spending” than congressional Democrats or the Obama administration.
“Anytime we have a focus on high spending you see an issue that Republicans have a two-to-one lead,” said Ed Goeas, the CEO of Tarrance Group.
Republican lawmakers also say Democrats risk a political backlash by forcing Republicans to block the legislation.
“The American people are fed up with dysfunction,” Senator George Voinovich, of Ohio, told reporters yesterday. The tactic, he said, “adds to people’s skepticism and lack of respect for what we are doing here.”
Pollsters say voters are likely to place blame on Congress -- rather than either party -- if the legislation fails, Doherty said.
“What’s striking is how there’s no shortage of negative views of the government in a variety of different dimensions,” said Doherty.
AP
