Congressional Democrats are inching closer to passage of a major rewrite of financial industry regulations, making fixes as they go.
House and Senate negotiators hoped for a vote in the House on Wednesday and to secure the votes of three straying Republicans in the Senate. The Senate vote, however, is not likely until after Congress' weeklong July 4 break.
The death of Sen. Robert Byrd, D-W.Va., this week and fresh objections from Republican Sens. Scott Brown of Massachusetts and Susan Collins and Olympia Snowe of Maine had threatened to derail the bill, already a year in the making.
Eager to salvage one of President Barack Obama's legislative priorities, Democrats altered the formula that would have paid for the legislation by eliminating a contentious $19 billion fee on large banks and hedge funds.
Instead, House and Senate negotiators, voting along party lines, agreed to pay for the bill with money generated by ending the unpopular Troubled Asset Relief Program — the $700 billion bank bailout created in the fall of 2008 at the height of the financial scare.
It was a solution Democrats weren't keen on and most Republicans denounced. But in the Senate, with 60-vote thresholds needed to overcome procedural hurdles, a single senator has the leverage to change a bill. Brown, Collins and Snowe were three of 61 senators who had previously backed a Senate version of the bill.
Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, said he ran the proposal past the three Republicans to make sure they would support it. "But obviously, until they actually cast a vote, you never know," he said.
Even if the House approved the bill Wednesday, the Senate had little time to take it up this week. In a rare honor, Byrd was to lie in repose in the Senate chamber for six hours Thursday. That and work on other unfinished legislation were likely to push the bill into the week of July 12.
White House spokesman Robert Gibbs conceded as much Tuesday, but added, "I don't think there is a question now whether it will get done."
Besides the three Republicans, Democrats also were working to win the support of Sen. Maria Cantwell, D-Wash., who voted against the Senate version last month. She complained the bill was not tough enough on banks.
If unable to secure 60 votes, Democrats would have to wait for West Virginia's Democratic governor, Joe Manchin, to appoint Byrd's successor. Manchin has said he has no timetable for his decision.
The far-reaching legislation would rewrite financial regulations by putting new limits on bank activities, creating an independent consumer protection bureau and adding new rules for largely unregulated financial instruments.
Working with the White House and Treasury officials, Democrats on Tuesday replaced the bank and hedge fund fee with $11 billion that would be freed by ending the government's authority to use the $700 billion bank bailout fund, known as TARP.
The bailout fund was scheduled to expire in October. The new proposal would end it as of June 25, essentially cutting Congress' spending authority from $700 billion to $475 billion. That would create an accounting adjustment that would generate $11 billion.
The balance of the cost could be covered by increasing premium rates paid by commercial banks to the Federal Deposit Insurance Corp. to insure bank deposits. The premiums would increase from 1.15 percent of insured deposits to 1.35 percent by September 2020. The additional premium would be paid by banks with assets greater than $10 billion.
Republicans weren't pleased.
"The American taxpayer should be affronted by this little bit of sleight of hand and gamesmanship," said Sen. Judd Gregg, R-N.H. "What a piece of misleading, misdirected financial management this is."
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