Nelson Joins GOP Senators to Stop Cloture Vote; Financial Bill Stalled

Monday, 26 Apr 2010 07:10 PM

 

Share:
  Comment  |
   Contact Us  |
  Print  
|  A   A  
  Copy Shortlink
WASHINGTON – The most sweeping overhaul of U.S. banking rules since the Great Depression stumbled in the Senate on Monday as Republicans united to prevent action on the bill.

The vote gives Republicans leverage to extract more concessions from Democrats on a measure that could ban banks from several lucrative types of trading and subject them to greater oversight.

Needing 60 votes in the 100-seat Senate to begin debate on the bill, Democrats fell three votes short.

The setback is not likely to be permanent. Lawmakers in both parties said they are close to agreement and the Senate could take up the bill later this week.

As Wall Street reels from a fraud case against Goldman Sachs Group Inc, lawmakers from both parties are eager to crack down on the financial industry before the November congressional elections. The vote came a day before Goldman executives were due to appear before a Senate panel.

"All of us want to deliver a reform that will tighten the screws on Wall Street. But we're not going to be rushed on another massive bill," Senate Republican Leader Mitch McConnell said ahead of the vote.

More than two years since the near-collapse of Bear Stearns ushered in the worst U.S. banking and capital market crisis in generations, both sides in the Senate were locked in negotiations toward a possible bipartisan compromise.

President Barack Obama and his fellow Democrats want tighter rules to prevent a repeat of the 2008-2009 crisis, which tipped the economy into a deep recession. Republicans see a need for reform, but say the Democrats' bill is a government overreach.

The future shape and profitability of the banking industry hangs in the balance.

The bill would form a consumer watchdog, bar banks from trading unrelated to clients and devise a new process for dismantling troubled financial firms. It also would crack down on the unpoliced $450 trillion derivatives market that helped ignite the financial crisis.

Democrats, who control 59 votes in the Senate, needed to hold their ranks and garner at least one Republican vote to begin debate on the bill.

But they came up short when conservative Democrat Ben Nelson joined Republicans to block the bill by a vote of 57 to 41. According to the Wall Street Journal, Nelson had sought to modify the bill to protect home-state investor Warren Buffett.

Senate Majority Leader Harry Reid also voted no, a tactical move that allows him to bring up the measure again once he secures the needed Republican support. "The only thing Republicans stand for is standing together," Reid said.

Republicans have struck a conciliatory tone and said they expect a final bill to pass by a wide margin.

The stakes are high for Obama. Since the passage of his landmark healthcare restructuring, he has sharply criticized Wall Street in speeches backing the Democratic bill.

Obama said he was "deeply disappointed" by the vote.

"Some of these senators may believe that this obstruction is a good political strategy, and others may see delay as an opportunity to take this debate behind closed doors, where financial industry lobbyists can water down reform or kill it altogether," Obama said in a statement.

Roughly two-thirds of Americans want stricter financial regulations, according to a Washington Post/ABC News poll released on Monday.

Hundreds of lobbyists for banks and Wall Street, sometimes working closely with Republicans, have been working for months to block or weaken the reform plans, which threaten bank profits, particularly in the lucrative derivatives market.

Bank stocks fell on Monday, with the KBW Banks index down 3.1 percent. The financial crisis hit bank stocks hard, but they are up 30 percent so far this year.

Democratic Senator Jeff Merkley told the Reuters Global Financial Regulation Summit on Monday that the bill Democrats were offering would require banks to spin off swap-trading units.

Swaps are a type of financial contract implicated in the downfall of bailed-out insurer AIG and other firms that bet heavily in the derivatives market.

Obama administration officials have declined to say whether they support that approach, though officials have praised the broader bill.

Republicans have focused their criticism on an element of the bill that would aim to end bailouts of "too big to fail" firms like Goldman. Democrats want an "orderly liquidation" process. As proposed, the bill aims to protect taxpayers from costly bailouts, like that of AIG, while shielding the economy from shock bankruptcies like Lehman Brothers' 2008 collapse.

Senator Richard Shelby, the lead Republican negotiator on the issue, has said it does not sufficiently ensure that taxpayers won't be on the hook for future bailouts.

"I am hoping that we can get a bill. I would like to get a bill this week, or next week, as soon as we can," he said after meeting with Democratic Senate Banking Committee Chairman Christopher Dodd a few hours before the vote.

HOUSE CLEARED BILL LAST YEAR

The U.S. House of Representatives approved a reform bill in December. Whatever the Senate produces would have to be merged with the House bill before a final measure could go to Obama to be signed into law. Analysts expect that by mid-year.

The reform debate has intensified amid the high-profile fraud case brought by the U.S. Securities and Exchange Commission against Goldman, a titan of Wall Street.

Goldman released three-year-old emails over the weekend that showed bond trader Fabrice Tourre wrote of the impending collapse of the subprime mortgage market and how he was masterminding ways at Goldman to make money from it.

Tourre is the only individual charged by the SEC in its case. Goldman released the e-mails as it readies for its appearance before a Senate panel on Tuesday.

Goldman Chief Executive Lloyd Blankfein and Tourre are slated to testify, with other former and current executives.

Goldman Sachs and Blankfein were hit with a shareholder lawsuit on Monday claiming they hid key details about a risky transaction that resulted in the SEC charges.

© 2014 Thomson/Reuters. All rights reserved.

Share:
  Comment  |
   Contact Us  |
  Print  
  Copy Shortlink
Around the Web
Join the Newsmax Community
Please review Community Guidelines before posting a comment.
>> Register to share your comments with the community.
>> Login if you are already a member.
blog comments powered by Disqus
 
Email:
Country
Zip Code:
Privacy: We never share your email.
 
Hot Topics
Follow Newsmax
Like us
on Facebook
Follow us
on Twitter
Add us
on Google Plus
Around the Web
Top Stories
You May Also Like

Mali's Islamists Withdraw Cease-Fire Pledge

Friday, 04 Jan 2013 13:06 PM

Tens of thousands of Fatah supporters rallied in the Hamas stronghold of Gaza on Friday for the first time since they we . . .

Fmr. CIA Director Hayden: Iran Nuclear Crisis Gets 'Scarier'

Tuesday, 17 Jul 2012 18:11 PM

 . . .

Join Fmr. CIA Director for Special Iran Briefing, Assess the Danger

Friday, 13 Jul 2012 12:27 PM

 . . .

Most Commented

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

 
NEWSMAX.COM
America's News Page
©  Newsmax Media, Inc.
All Rights Reserved