Senate Minority Leader Mitch McConnell says a Senate bill aimed at regulating the financial industry "will lead to endless taxpayer bailouts of Wall Street banks."
The Senate Republican Leader was among a bipartisan group of congressional leaders who met with President Barack Obama on the topic earlier this week.
The President says the bill will prevent bailouts by regulating risky financial instruments.
The bill could come up for a vote early next week.
McConnell focused on the proposed financial reforms during three floor speeches this week.
Flaws in Wall Street Bill Can and Should be Corrected (Thursday)
Here are some articles you might find interesting.
Sen. Jack Reed (D-R.I.) floated the names of Senate GOP colleagues on Friday who might break ranks on financial regulatory reform.
Reed, a member of the Senate Banking Committee, hinted that Sens. Susan Collins (Maine), Bob Corker (Tenn.) and Judd Gregg (N.H.) might be among the Republicans who could end up voting with Democrats to advance financial regulatory reform legislation.
"I hope that, among the Republicans, there are some people who want to support consumers and the American public," Reed said during an appearance on MSNBC. "We've had some consideration and cooperation by people like Judd Gregg, Bob Corker, Susan Collins, and there are others. And I just hope we have those votes."
Senate Majority Leader Harry Reid plans to bring the financial industry overhaul to the Senate floor next week, accelerating a major showdown on one of the Obama administration’s highest legislative priorities.
The new timetable is a shift from where Democrats had been earlier this week, when the Nevada Democrat was prepared to give Senate Banking Committee Chairman Chris Dodd through next week to continue talks with Alabama Sen. Richard Shelby, the ranking Republican on the panel.
But Reid on Thursday upped the pressure on negotiations, saying, “We’re hoping to get this bill to the floor next week.”
As Democratic leaders prepared for a hastened floor fight — and honed their message during a closed-door luncheon with top White House aides — Senate Minority Leader Mitch McConnell struggled to persuade all 41 members of his Republican Conference to sign a letter calling on Democrats to re-engage in bipartisan negotiations.
A candid President Obama vowed Thursday evening that he would continue to reach out to Republicans and take their ideas into consideration, even as he took a light jab at some of his conservative critics in the Tea Party movement.
The president, speaking a Democratic fundraiser in Miami, urged lawmakers on both sides of the aisle to pass financial regulatory reform and warned them not to bow to pressure from firms and lobbyists trying to kill the legislation.
"We should all agree that we've got to pass common-sense Wall Street reform," he told the crowd of 1,000 at Thursday's DNC fundraiser, where tickets ranged from $250 to $1,250 a pop. Republicans have argued that the Democrats financial overhaul could lead to more bank bailouts rather than prevent them.
Obama also credited his signature economic recovery package with putting more than two million Americans back to work and with cutting taxes for families, and students. And he singled out the anti-tax tea party movement that fanned out across the country Thursday to hold demonstrations and rallies marking Tax Day.
"I've been a little amused over the last couple of days where people have been having these rallies about taxes," the president said, noting the numerous tax cuts pushed by his administration. "You would think they'd be saying thank you."
President Obama met today with members of Congress to jawbone them on the pending financial reform bill. A key part of his message: “we must end taxpayer bailouts.” Few statements are less controversial than that. Nobody wants to see more bailouts.
But wait a second. Doesn’t the very legislation he’s plumping for — and which will soon be voted on in the Senate — itself provides for bailouts. When asked that by a reporter just before the meeting, the President hedged, saying only “…I am absolutely confident that the bill that emerges is going to be a bill that prevents bailouts. That’s the goal.”
Well, that goal, as it turns out, only survives up to page 134 of the 1,334 page Senate bill. On that page begins a section entitled “Funding for Orderly Liquidation.” The text reads that the Federal Deposit Insurance Corporation, the designated federal receiver for failing financial firms, “may make available…funds for the orderly liquidation of [a] covered financial institution.”
Where are those funds to come from? Well, on page 272 the bill creates an “Orderly Resolution Fund” within the U.S. Treasury. The target size of this fund? Fifty billion dollars.
That sure looks like a bailout fund. Yet, the bill’s supporters deny it. Elizabeth Warren, a leading proponent of the plan, calls the idea that it perpetuates bailouts “just nuts.”
By JIM KUHNHENN
Associated Press Writer
WASHINGTON (AP) - Unwilling to negotiate further, Democratic leaders said Thursday they want to move forward on financial regulation legislation next week even as Republican leaders tried to unify their members against the bill in hopes of winning further concessions.
At the same time, Democrats were preparing to introduce companion legislation Friday that would bar some of the nation's biggest banks from engaging in derivatives trades. Derivatives, a growing vehicle for financial speculation, have become a significant source of revenue for large financial institutions. The proposal faces stiff industry opposition.
On the broader regulation bill, Senate GOP leaders were seeking to get all 41 Republicans to sign a letter opposing it. At least one, Sen. Susan Collins of Maine, had not signed on but said she nonetheless opposed the White House-backed legislation.
The day evolved into a test of wills, with Democrats ready to dare Republicans to oppose the legislation. Officials said Senate Majority Leader Harry Reid could take steps late next week that would guarantee a test vote on the legislation as early as April 27.
"We have talked about this enough," Reid said. "We have negotiated this enough."
The confrontational tone was driving both sides apart and a broad-based compromise between Banking Committee Chairman Chris
Dodd, D-Conn., and the top committee Republican, Richard Shelby of Alabama, seemed increasingly unlikely. Instead, Democrats were looking to pick off a handful of Republicans with adjustments to the bill that would not alter it substantially.
One Republican who negotiated aspects of the bill with Dodd, Sen. Bob Corker of Tennessee, said some of the attacks on the bill “have been over the top." In the kind of unscripted exchange rarely seen on the Senate floor, Corker complimented Dodd on his bill and urged him to restart negotiations. Dodd, standing a few feet away, replied by voicing frustration that the bill was now being cast as a partisan measure by Senate Republican leader Mitch McConnell.
"Why would you bother doing what I went through if, in fact, at the end of it all, the answer is, 'I'm sorry, we didn't get our way, so we're going to stop our debate,"' Dodd said.
Both Corker and Shelby signed the leadership letter opposing Dodd's bill.
McConnell and other top Republicans have characterized Dodd's bill as a perpetuation of bailouts for financial firms. They say a proposed $50 billion fund financed by large banks to pay for liquidating a large failing firm would give shareholders and creditors the impression that their investments would be protected, even in failure, and contribute to risky financial behavior. Corker and Republican banking aides also pointed to language inserted by the Treasury Department and the Federal Deposit Insurance Corp. that would give the government more flexibility to cover claims from creditors.
"I would do the same thing if I were them, but there are some things that need to be tightened up," Corker said.
Diana Farrell, deputy director of the White House's National Economic Council, said the legislation ensures that taxpayers would not be on the hook to liquidate giant institutions because the $50 billion would be financed by
large financial firms.
The added language by Treasury and the FDIC are "technical issues about how you best unwind a firm," she said in an interview. "This is not about injecting capital, this is really just a way of how you can best and most efficiently let a firm fail."
The Obama administration and Senate Democrats were hunting for Republican support. Geithner invited Sen. Scott Brown, R-Mass., for a chat Thursday morning and scheduled more meetings for Friday, including one with Sen. Richard Lugar, R-Ind.
But Democrats themselves are not all happy with Dodd's bill. Several want to strengthen it and at least one, conservative Sen. Ben Nelson of Nebraska, said he was concerned the bill's regulations might reach too broadly. He said he had not decided how he would vote.
Democrats on the Senate Agriculture Committee planned to introduce legislation Friday that would regulate derivatives with tougher conditions than are contained in Dodd's bill. Agriculture Committee Chairwoman Blanche Lincoln, D-Ark., will require banks that trade in complex derivatives, or swaps, to end those operations or lose access to Federal Reserve lending or FDIC insurance of deposit account, aides said Thursday.
One type of derivative blamed for the financial crisis were credit default swaps, a form of insurance against loan defaults. Many were mortgage-backed securities that became toxic during the housing crisis.
The Dodd bill also contains derivatives regulations but focuses more on shifting the instruments to regulated exchanges. Republicans and Democrats, however, are split on whether to give exceptions to certain firms that only use derivatives to hedge against market fluctuations.
Bank lobbyists decried the Lincoln provisions, arguing they would make U.S. banks less competitive globally.
"Derivatives are a proven risk-management tool," said Scott Talbott, top lobbyist for the Financial Services Roundtable, an industry group. "To require divestment will actually make the financial institution more risky, which is the exact opposite direction we should be moving."
Where do you stand on the proposed financial reforms? Let me know your thoughts.
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