Republicans block action on financial bill, circulate alternativesBy AP
Tuesday, April 27, 2010
Senate GOP blocks financial reg bill again
WASHINGTON — For the second day in a row, Senate Republicans have blocked action on legislation to impose greater federal control on the nation’s financial industry.
The vote was 57-41, three short of the 60 needed for Democrats to advance their measure.
A third test vote is expected on Wednesday.
Democrats accuse Republicans of trying to block legislation as a favor to Wall Street. GOP leaders say that’s not so — and are circulating options they say could form the basis for compromise.
THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.
WASHINGTON (AP) — Aiming their finger wagging at Goldman Sachs, Democrats on Tuesday used the giant investment firm’s legal troubles to draw attention to their financial regulatory legislation and Republican efforts to delay the start of debate.
“As we speak, lobbyists fill the halls of Congress, hoping to weaken or kill legislation aimed at reforming these abuses,” Sen. Carl Levin, D-Mich., told current and former Goldman Sachs executives arrayed before him. “Wall Street is on the wrong side of this fight.”
Democrats planned to keep up the pressure on Republicans after an expected setback put the brakes on Senate consideration of financial regulations. They scheduled a vote for Tuesday afternoon to test the Republicans’ unity.
The vote comes on the same day a Senate investigative subcommittee drew attention to a Securities and Exchange Commission lawsuit alleging fraud by Goldman Sachs. Witnesses included Goldman chairman and chief executive Lloyd Blankfein and Fabrice Tourre, the Goldman Sachs trader at the center of the SEC charges.
Levin, the subcommittee’s chairman, scolded the executives before him: “I hope the executives before us today, and their colleagues on Wall Street, will recognize the harm that their actions have caused to so many of their fellow citizens.”
Democrats’ efforts to proceed with the bill grew slightly more complicated by the defection — at least for now — of one Democrat, Sen. Ben Nelson of Nebraska.
Nelson voted with Republicans on Monday to deny Democrats the 60 votes they needed to advance the legislation to a floor debate. Democrats were expected to try again Tuesday, and yet again the day after if necessary.
In a statement, Nelson, a conservative Nebraska Democrat, said his vote reflected concerns about the bill raised by Nebraska businessmen. Before the vote, Nelson huddled with Senate Banking Committee Chairman Chris Dodd, D-Conn., to discuss a regulatory item of interest to one Nebraska businessman in particular — billionaire investor Warren Buffett.
The legislation would require derivatives — previously unregulated exotic securities — to be traded in open exchanges and cleared through a third party that would guarantee the contracts. Companies trading in derivatives would also have to put up collateral to back up the derivatives contracts.
An agreement Monday between Dodd and Agriculture Committee Chairwoman Blanche Lincoln, D-Ark., would exempt existing derivatives contracts from the clearing requirements.
Lincoln’s proposal also would have exempted existing derivatives contracts from margin requirements, or collateral. But Dodd succeeded in eliminating the collateral exception. That would potentially add significant costs to companies with derivatives portfolios. Barclay’s Capital estimates that Buffett’s Berkshire Hathaway Inc.’s derivatives portfolio is valued at $63 billion and that the Senate provision would cost it $6 billion to $8 billion in collateral.
“I was prepared to grandfather existing derivatives that have not been cleared, but I can’t say you can’t have margin requirements,” said Dodd, explaining his discussion with Nelson.
In his statement, Nelson asserted that “no one should view my vote today as an indication that I won’t support the bill currently being negotiated by the Banking Committee.”
At the end, Senate Majority Leader Harry Reid switched his vote to “no,” too — a maneuver that will enable him to call for a new tally Tuesday afternoon. If that failed, Reid, D-Nev., envisioned another vote Wednesday.
Democrats believe public pressure and the scent of a Wall Street scandal have given them the upper hand. Republicans themselves have taken up the Democrats’ Wall Street-bashing rhetoric and have voiced hope that a bill will ultimately pass.
“All of us want to deliver a reform that will tighten the screws on Wall Street,” said Senate Republican leader Mitch McConnell of Kentucky. “But we’re not going to be rushed on another massive bill based on the assurances of our friends on the other side.”
Richard Shelby, the top Republican on the Banking Committee, again expressed optimism that he and Dodd could strike a deal over remaining differences. “Most Republicans want a bill, but they want a substantive bill,” said Shelby, R-Ala.
But while Dodd continued to meet with Shelby, Reid’s plan to continue testing Republican resolve illustrated the Democrats’ lack of patience for more negotiations.
“We will not tolerate efforts to slow-walk this process or water down this reform,” Reid said.
Tags: Carl levin, Goldman sachs, Government Regulations, Nebraska, North America, Political Organizations, Political Parties, United States, Washington