Fights over derivatives and bailouts are getting more attention, but Senate Republicans are planning a battle over two federal agencies created by Senate Democrats' financial-regulation bill, warning that the proposed agencies give the government new ways to tap into consumers' personal information.
As the Senate on Tuesday slogged through more debate on the far-reaching regulatory overhaul, the privacy concerns could present another hurdle for Democrats hoping to pass a bill by the middle of the month.
The measure, backed by President Obama, is arguably the biggest piece of legislation still left on Congress' must-pass calendar heading into November's elections. The House passed a regulation bill in December, but that legislation attracted no Republican support and the Senate is considered the more critical battleground.
The privacy issues bubbled up quietly after Democrats passed their bill out of committee last month, but the fears have gained traction in the past couple of weeks as two top Republicans have questioned the proposed Office of Financial Research and the Bureau of Consumer Financial Protection, both to be created under the bill as written by Democrats.
The consumer protection bureau, to be part of the Federal Reserve, and the financial research office, proposed within the Treasury Department, could gather information on financial transactions right down to consumers' loans, according to critics, who said this is the first time the government would cast such a wide net.
"They both have sweeping authority to collect information about financial transactions, and there's little to ensure they aren't going to collect detailed information, personal financial transactions," said Jim Harper, director of information-policy studies at the Cato Institute.
With data-mining tools growing ever more powerful, he said, the best solution is to stop the government from collecting the information in the first place.
Senate aides and Republican operatives helping to coordinate strategy off Capitol Hill said they have prepared multiple amendments to reel in both agencies.
Democratic staffers on the Senate Banking, Housing and Urban Affairs Committee didn't return messages, but during floor debate last week, Sen. Christopher J. Dodd, Connecticut Democrat, who is chairman of the committee and wrote most of the Senate's bill, called those charges "totally false" and said opponents are trying to hook onto anything that could tarnish the legislation.
"That is the intent of all this. I know what it is," Mr. Dodd said. "They do not want to take on the bill itself and what it does, so they are out there propagandizing with false information about this to undermine what we are trying to achieve."
Separately, liberal lawmakers are demanding an audit of the Federal Reserve and will offer amendments to try to break up financial companies that are on the verge of becoming "too big to fail."
Senators also were trying to seal a bipartisan deal to drop a $50 billion fund Democrats sought to help dismantle troubled financial institutions. If that fund is eliminated, it could prove a major break in the logjam blocking the bill's passage.
But the overall bill remained stalled Tuesday, and Senate Majority Leader Harry Reid, Nevada Democrat, accused Republicans of refusing to allow votes on any amendments to stall the overall bill.
The Senate is now racing a mid-May deadline imposed by Mr. Reid, who said that's all the time he can spare, as he must push on to other issues, such as food contamination and emergency spending bills.
"We have no choice but to finish it by the end of next week," said Mr. Reid, effectively putting a cap on the debate only minutes after Senate Minority Leader Mitch McConnell, Kentucky Republican, begged for extended floor time.
Mr. Dodd faces other criticism, this time from the left.
While his bill seeks to shield taxpayers from getting stuck with the tab should major banks run into trouble in the future, Sen. Byron L. Dorgan, North Dakota Democrat, plans an amendment to prevent companies from getting so big that they would need taxpayer aid in the first place. His amendment would force firms to divest of the parts of their business that made them too big.
"If you are too big to fail, you are too big," Mr. Dorgan said.
Another idea, sponsored by two other Democratic senators, calls for limiting the liabilities banks can hold.
Even as those proposals were circulating, Mr. Dodd and Sen. Richard C. Shelby of Alabama, the ranking Republican on the banking committee, appeared close to a deal to jettison the $50 billion fund to dismantle troubled firms.
Big financial institutions would have paid into the fund, but Mr. McConnell and other Republicans said it would have enshrined government bailouts — even though Democrats argued that taxpayers would not have footed the bill and the companies would have been dismantled.
© Copyright 2014 The Washington Times, LLC