WASHINGTON (AP) - Now it's all about the details.
With Republicans ceding the way for debate, legislation to
impose sweeping new controls on financial institutions faces a test
from both parties. Some Democrats seek tougher restrictions on
banks; some Republicans aim to ease consumer protection provisions.
Senate officials expect about two weeks of votes on amendments
that could change the bill in substantial ways.
The legislation, aimed at preventing a recurrence of the crisis
that knocked the nation's financial system to its knees in 2008,
advanced Wednesday when Republicans abandoned their blockade in the
Senate. The House has already passed its version.
While Democrats and Republicans agree the Senate will ultimately
pass landmark changes, how the debate unfolds will determine
whether the legislation achieves significant bipartisan support.
Democrats still need 60 votes to get past procedural obstacles, a
number they can't reach without at least one Republican on their
"It is not just Republicans who are going to offer
amendments," said Sen. Bob Corker, R-Tenn. "This may be a real
debate, which would shock America."
The bill would establish a nine-member Financial Services
Oversight Council, including the treasury secretary, the Federal
Reserve chairman and the heads of regulatory agencies to monitor
markets for threats, such as the bubble in housing prices and
mortgage-backed securities that preceded the near-collapse two
The Federal Reserve would begin policing large bank holding
companies and interconnected nonbank institutions whose collapse
might pose a threat to the economy. With approval of the council,
the Fed could even break up complex companies that posed a grave
Most investment derivatives - such as the hundreds of billions
of dollars in complex instruments blamed for accelerating the
crisis two years ago - would have to be traded on regulated
President Barack Obama said he was pleased debate on the Senate
bill would proceed and said he hoped to sign a final version "very
"We'll end up having a safer, more secure financial system,"
Obama told reporters on Air Force One as he returned to Washington
from a trip to the Midwest, "and I think banks and other financial
institutions can get back to making money the old-fashioned way, by
lending it to companies to build business and create jobs and do
all the things we want our financial system to do."
Sen. Richard Shelby of Alabama, the top Republican on the
Banking Committee, said Wednesday he had received assurances that
Democrats would adjust the bill to address GOP concerns that it
would perpetuate bailouts of banks. But he said he and Sen. Chris
Dodd, D-Conn., the committee chairman, had given up finding common
ground on other provisions, including Dodd's consumer protection
language, which Republicans say goes too far.
Dodd said his talks with Shelby had been productive. "But," he
added, "I cannot agree to his desire to weaken consumer
protections given the enormous abuses we have seen."
Republicans said they now expect Democrats to jettison a $50
billion fund that would have been financed by banks to help
liquidate large failing institutions. The Republicans said they
also expect Democrats to tighten language so the bill would mandate
that shareholders' stakes in a failing firm be wiped out. The
current bill says there would be that presumption.
"Now that those bipartisan negotiations have ended," said
Senate Republican leader Mitch McConnell, "it is my hope that the
majority's avowed interest in improving this legislation on the
Senate floor is genuine and the partisan gamesmanship is over."
Democrats said the Republicans had given in after three days of
votes to block debate, realizing they were on the losing end of a
battle for public opinion. The Republican retreat came one day
after senior executives of Wall Street giant Goldman Sachs were
denounced by lawmakers from both parties at a marathon Senate
Sen. Sheldon Whitehouse, D-R.I., said: "There's been immense
pressure bottled up inside the Republican caucus through these last
three votes. A lot of their members have been very deeply unhappy
with the direction their leadership has been taking them. Better
Republicans have begun to focus their criticism on the consumer
The Senate Democrats' bill would create a Consumer Financial
Protection Bureau within the Federal Reserve that would have power
to police transactions between financial institutions and their
Republicans say the bill would have unintended consequences that
could ensnare small business owners for merely extending credit to
A group of Democrats is also seeking to put new restrictions on
banks, including placing limits on their size.