In a setback for the Obama administration, Senate Democrats failed to muster enough votes on Wednesday to end debate on the biggest overhaul of financial regulation since the 1930s, delaying a vote on passage.
But analysts still expect the legislation eventually to pass. More debate on amendments was likely, with banks on alert for changes that could threaten their profits.
Senate Democratic Leader Harry Reid scheduled another vote for 2:30 p.m. EDT Thursday.
In the 57 to 42 vote, two Democrats sided against invoking "cloture" to limit debate and move toward final passage. Sixty votes are needed to end debate in the Senate. Two Republicans voted with a majority of Democrats for cloture.
The loss seemed to come as a surprise to Democrats on a measure that enjoys widespread public support.
As backers of the bill scrambled for votes, Democratic Senator Arlen Specter was nowhere to be found one day after he lost a primary challenge in his home state of Pennsylvania.
"I don't have a sense on when he will be back," an aide said.
Reid said one lawmaker had gone back on his word to support the bill. He declined to name the lawmaker, but a Democratic aide said it was Republican Scott Brown, who has backed Democrats on other tight votes.
Brown voted against the bill because it would cost jobs and did not include measures he thought would be in there, a spokesman said. "He made that clear before his vote and after," spokesman Colin Reed said.
The procedural setback mirrored those that took place nearly a month ago, when Republicans prevented the Senate from beginning debate on the bill before eventually giving in.
The delay means the Senate will have less time to work on job-creation legislation and other Democratic priorities.
In the meantime, Democrats noted that Wall Street is still operating under the same regulations that were in place during the 2007-2009 financial crisis that set off a deep recession.
"They want to let Wall Street off the hook," Reid said of Republicans.
The vote came near the end of a turbulent day in which Democrat Christopher Dodd, manager and author of the bill, backed away from a confrontation with another powerful Senate committee chairman over swaps market regulation.
In a move to defuse tension with fellow Democrat Blanche Lincoln, Dodd dropped an attempt to kill a Lincoln proposal that would force banks out of the swap-trading business.
Wall Street, which dominates the swaps business and reaps huge profits from it, firmly opposes the Lincoln proposal.
The Dodd bill is a top priority of President Barack Obama, who wants to tighten the rules for banks and markets to prevent a recurrence of the 2007-2009 financial crisis, which tipped the economy into a deep recession and caused huge taxpayer bailouts of banks and a voter backlash.
Political momentum has been running heavily against Wall Street, which fought for months to kill or weaken the reform bill, only to see lawmakers further tighten the rules.
Politicians from both parties want to show voters they are getting tough on Wall Street before November elections.
Dodd, Banking Committee chairman, has fended off proposals from some Democrats that could upend the financial industry, but analysts expect the final legislation will still cut into profits for banks and other firms on Wall Street.
"The final bill will contain fundamentally tough reforms, creating many headwinds to banks' profitability," analysts at FBR Capital Markets wrote in a research note.
The failed cloture vote lets lawmakers keep pushing for proposals that otherwise would fall by the wayside.
Democratic Senator Maria Cantwell, one of two Democrats to oppose cloture, continued after the vote to press for tighter regulation of derivatives.
A spokesman for Russ Feingold, the other Democrat to vote against cloture, said he did not believe the bill was strong enough to prevent another financial crisis.
Later in the evening, the Senate rejected a proposal that would have allowed states to enforce interest-rate limits on credit-card issuers located beyond their borders.
The 35 to 60 vote was a victory for large banks like JPMorgan Chase that have suffered several other legislative defeats elsewhere in the bill.
Democrats have kept in play an effort to toughen rules preventing banks from engaging in high-risk proprietary trading. Republicans have blocked it from coming to a vote, but its Democratic backers kept it alive with a parliamentary tactic.
The amendment from Democrats Jeff Merkley and Carl Levin would limit regulators' leeway to water down the rule first proposed in January by Obama and White House economic adviser Paul Volcker.
Few Republican amendments to weaken the bill remained. Among the most significant was a proposal by Senator Sam Brownback to exempt automobile dealers from a new consumer-protection bureau, which Republicans argue could saddle small businesses with onerous regulations.
Dodd's move on the Lincoln provision meant Democrats still had some decisions to make on regulating OTC derivatives.
As drafted now, the Dodd bill contains Lincoln's proposal to force banks to separate their lucrative swap-trading desks from their core operations. Dodd floated a compromise on Tuesday to suspend the Lincoln provision for two years.
But he backed down after Lincoln, chairman of the Senate Agriculture Committee, said she would fight to defend her plan and after markets complained that Dodd's compromise would cast a two-year cloud of uncertainty over the derivatives market.
Lincoln faces a tough electoral challenge from the left in her home state of Arkansas. Some analysts had expected her to quietly drop her rule after Tuesday's primary Senate election.
But she failed to win 50 percent of the vote against Lieutenant Governor Bill Holder, setting up a June 8 runoff.
Dodd could try to remove the provision when Senate negotiators reconcile their bill with one approved by the House of Representatives in December.
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