GOP Backs Off On Financial Reform

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> By Jim Kuhnhenn

The Associated Press

WASHINGTON

Republicans abandoned their blockade against legislation to clamp tough new controls on Wall Street on Wednesday, clearing a road to likely passage for the most sweeping rewrite of financial rules since the Great Depression. President Barack Obama said he hopes to sign a financial regulatory bill “very soon.”

Democrats and Republicans agree the Senate will ultimately pass landmark changes aimed at preventing a recurrence of the crisis that knocked the nation’s financial system to its knees in 2008, but the battle now begins over crucial details. The House has already passed its version.

Democrats said the Republicans had given in after three days of votes to block debate, realizing they were on the losing end of a battle for public opinion. GOP lawmakers said they would switch to trying to change the bill on the Senate floor.

Democrats had threatened to hold the Senate in session all night, making their case that the Republicans were stalling legislation of importance to virtually every American. The Democrats also have been laying plans to make the legislation a major issue in midterm elections this summer and fall. The Republican switch came one day after senior executives of Wall Street giant Goldman Sachs were denounced by lawmakers from both parties at a marathon Senate hearing.

In the debate that now can proceed, both Democrats and Republicans will try to change the underlying bill. Republicans will take particular aim at the magnitude of consumer-protection provisions that Obama says are vital. Liberal Democrats are expected to seek to limit the size of banks.

The GOP decision to allow the debate came after Sen. Richard Shelby, the top Republican on the Senate Banking committee, told his colleagues that he could win no further concessions from Banking Committee chairman Christopher Dodd in private talks. He said Dodd agreed to adjust some provisions that Republicans had complained would permit further bank bailouts.

But there were already signs that some Republicans were growing weary of continuing to block the bill after Obama and other Democrats accused them of siding with Wall Street .

“The point of all of this was to make sure that as long as those discussions could bear results that we would support that effort,” Republican Sen. Olympia Snowe of Maine said of her party’s objections. “Now we proceed to the floor for amendments on the remainder of the bill.”

How the debate unfolds will determine whether the legislation achieves significant bipartisan support. Democrats still need 60 votes to get past procedural obstacles, a number they can’t reach without at least one Republican on their side.

The bill would establish a nine-member Financial Services Oversight Council, including the treasury secretary, Federal Reserve chairman and the heads of regulatory agencies to monitor markets for threats, such as the bubble in housing prices and mortgage-backed securities that preceded the financial near-collapse two years ago.

The Federal Reserve would begin policing large bank holding companies and interconnected nonbank institutions whose collapse might pose a threat to the economy. With approval of the council, the Fed could even break up complex companies that posed a grave threat.

Most investment derivatives – such as the hundreds of billions of dollars in complex instruments blamed for accelerating the crisis two years ago – would have to be traded on regulated exchanges.

Shelby, the top Republican on the Banking Committee, said Wednesday that he had received assurances that Democrats would adjust the bill to address GOP concerns that it would perpetuate bailouts of banks. what’s next

Both Democrats and Republicans will try to change the underlying bill. Republicans will take aim at consumer-protection provisions. Liberal Democrats are expected to seek to limit the size of banks .
LOAD-DATE: April 29, 2010

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