Wall Street Reform Passes the Senate
On a vote of 59 to 39, the Senate passed its version of financial regulatory reform last night. Most observers I’ve been reading feel that it’s a stronger bill than originally expected, while not as strong as many would have liked.
The bill next goes to a House-Senate conference committee, where it is to be merged with a version passed last year in the House.
Here’s a sampling from some of the early reporting following the Senate’s action, in no particular order:
The Senate Thursday night passed the most sweeping changes in government regulation of the nation’s financial institutions since the Great Depression, including strong new consumer and investor protections and provisions that seek to shine a bright light on the dark corners of Wall Street.
In a 59-39 vote, four Republicans joined 53 Democrats and two independents in approving the Restoring American Financial Stability Act of 2010. Two Democrats, Washington’s Maria Cantwell and Wisconsin’s Russ Feingold, as well as 37 Republicans, voted no.
Republican Sens. Olympia Snowe and Susan Collins of Maine, as well as Scott Brown of Massachusetts and Charles Grassley of Iowa voted yes; Democrats Robert Byrd of West Virginia and Arlen Specter of Pennsylvania, who lost in Tuesday’s primary, didn’t vote.
The House of Representatives passed a similar version, the Wall Street Reform and Consumer Protection Act of 2009, six months ago. The two bills must now be reconciled in negotiations between the two chambers, passed anew by each and sent to President Barack Obama for his signature, which is expected by July 4.
“Our goal is not to punish the banks, but to protect the larger economy and the American people,” Obama said Thursday.
[The bill] also would create a new independent entity — called the Bureau of Consumer Financial Protection — to write rules for consumer credit products such as mortgages, student loans and credit cards, aimed at preventing predatory lending and creative loans of the sort that got so many homeowners in trouble.
“If you’ve ever applied for a credit card, a student loan, or a mortgage, you know the feeling of signing your name to pages of barely understandable fine print,” Obama said Thursday. “It’s a big step for most families, but one that’s often filled with unnecessary confusion and apprehension. As a result, many Americans are simply duped into hidden fees and loans they just can’t afford by companies that know exactly what they’re doing.”
The Senate avoided the recent custom of the minority engaging in maximum obstruction to slow down the passage of a law that has the votes to pass, and wound up voting in favor of an overhaul of Wall Street regulation last night: “The vote was 59 to 39, with four Republicans joining the Democratic majority in favor of the bill. Two Democrats opposed the measure, saying it was still not tough enough.”
Next up, the bill needs to be merged with the House version of regulatory reform that passed last summer. In this case the House and Senate bills are different in non-trivial ways on pretty much all the major fronts—resolution authority, prudential regulation, consumer protection, and derivatives—so it’s not totally obvious how this is going to play out. Another interesting issue will be the vote count in the House when the bill comes out again. The House version of the legislation was a classic Obama-era bill that passed by a razor-thin margin with no Republicans in favor and many moderate Democrats against. The Senate bill, by contrast, had four Republican yesses and two nos from the left.
Joan McCarter at Daily Kos:
In a vote of 59-39, the Senate passed the financial reform bill. At the last moment, Wall Street got another win. They convinced Sen. Brownback to pull his car-dealer protection act so that the Merkley-Levin Volker rule amendment would also be withdrawn. Since it had been attached as a second degree amendment to Brownback, it’s fate was linked.
It’s not as strong a bill on the whole as it certainly should have been. But two warriors against Wall Street are philosophical in their view of the bill. Here’s Byron Dorgan and Bernie Sanders, talking to TPM’s Brian Beutler.
“I forced a vote on naked credit default swaps–banning naked credit default swaps,” Dorgan told me after casting in with his party. Dorgan’s amendment was tabled, but he regards the vote on a motion to table as a referendum on the legislation itself. Those 57 senators who voted to table his legislation were, in effect, voting against it.
But ultimately, he simply wasn’t interested in killing it. “This bill is short of what Congress should do, but it moves in the right direction, although it moves less aggressively than I would like to see it move,” Dorgan added. “Unlike some years ago when the issue was a piece of legislation, Gramm-Leach-Bliley, was I think just fundamentally wrong. I was very interested in stopping it. In this case I’m very interested in starting a piece of legislation that is constructively financial reform.”
….
“I think this is a step forward, there’s no question about that,” Sen. Bernie Sanders (I-VT) told reporters after today’s vote. “I think it brings much greater regulation, I think it brings much greater transparency. But I think, frankly, it is nowhere near as strong as it could be. I think at the end of the day we are going to have to address the need to break up these very very huge financial institutions, which I believe, that if they start teetering in the future they will have to be bailed out, and that’s why you ought to break them up now.”
Dorgan agrees. “As long as our country has financial institutions too big to fail, I think you’re going to have failure,” Dorgan told me. “And I think ultimately the taxpayers will be called upon to bail them out.”
The fact that the Merkley-Levin amendment did not get a vote is a clear set-back for progressive efforts to strengthen the reform bill. It would have given real teeth to the so-called Volcker Rule, inserting specific restrictions on things like risky proprietary trading and hedge fund ownership by commercial banks. The bill approved last night simply empowers regulators to study what those rules might be — at best kicking that particular can down the road.
After a tense afternoon of votes stretched into the evening, the Senate passed its financial-reform legislation, setting the stage for negotiations with the House to craft a final package that will be voted on once more by both chambers before arriving on President Obama’s desk.
After the Democrats, joined by three Republicans, successfully overcame efforts to block a vote on the bill in the afternoon, 30 hours were allotted before final passage — unless Republicans could be convinced to dispense with the debate and any additional amendments.
Particularly at stake was an amendment from Sam Brownback to exempt auto dealers from consumer regulation and another amendment proposed by Sens. Merkley and Levin to strengthen a measure already in the bill to limit the kinds of risky business banks can engage in.
While the Merkley-Levin amendment could not be voted on post-cloture due to a technicality, in a clever bit of legislative jujitsu, the two attached their amendment to Brownback’s as a second-order amendment, meaning that both would have to be voted on together to enter the bill. Reformers opposed Brownback and supported Merkley-Levin, but could at least see stronger restrictions on Wall Street if Brownback succeeded.
Republicans, however, proved reluctant to force another symbolic vote that would reveal their support of Wall Street. Brownback pulled his amendment, leading to an agreement on how to proceed: After a procedural objection from Republicans that required 60 votes to set aside, voting for final passage began at approximately 8:45. The bill passed 59-39; Democrats Maria Cantwell and Russ Feingold registered their opposition from the left after amendments to strengthen the bill were left to languish, while four Republicans — Chuck Grassley, Susan Collins, Olympia Snowe, and Scott Brown — crossed the aisle to support the bill. (Two senators, Robert Byrd and Arlen Specter, did not vote.)
Tags: financial reform, Wall Street Reform
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