WASHINGTON (AP) - Congressional Democrats are inching closer to
passage of a major rewrite of financial industry regulations,
making fixes as they go.
House and Senate negotiators hoped for a vote in the House on
Wednesday and to secure the votes of three straying Republicans in
the Senate. The Senate vote, however, is not likely until after
Congress' weeklong July 4 break.
The death of Sen. Robert Byrd, D-W.Va., this week and fresh
objections from Republican Sens. Scott Brown of Massachusetts and
Susan Collins and Olympia Snowe of Maine had threatened to derail
the bill, already a year in the making.
Eager to salvage one of President Barack Obama's legislative
priorities, Democrats dropped their proposed $19 billion fee on
large banks and hedge funds.
Instead, House and Senate negotiators, voting along party lines,
agreed to pay for the bill with money generated by ending the
unpopular Troubled Asset Relief Program - the $700 billion bank
bailout created in the fall of 2008 at the height of the financial
It was a solution Democrats weren't keen on and most Republicans
denounced. But in the Senate, with 60-vote thresholds needed to
overcome procedural hurdles, a single senator has the leverage to
change a bill. Brown, Collins and Snowe were three of 61 senators
who had previously backed a Senate version of the bill.
Sen. Chris Dodd, D-Conn., chairman of the Senate Banking
Committee, said he ran the proposal past the three Republicans to
make sure they would support it. "But obviously, until they
actually cast a vote, you never know," he said.
Even if the House approved the bill Wednesday, the Senate had
little time to take it up this week. In a rare honor, Byrd was to
lie in repose in the Senate chamber for six hours Thursday. That
and work on other unfinished legislation were likely to push the
bill into the week of July 12.
White House spokesman Robert Gibbs conceded as much Tuesday, but
added, "I don't think there is a question now whether it will get
Besides the three Republicans, Democrats also were working to
win the support of Sen. Maria Cantwell, D-Wash., who voted against
the Senate version last month. She complained the bill was not
tough enough on banks.
If unable to secure 60 votes, Democrats would have to wait for
West Virginia's Democratic governor, Joe Manchin, to appoint Byrd's
successor. Manchin has said he has no timetable for his decision.
The far-reaching legislation would rewrite financial regulations
by putting new limits on bank activities, creating an independent
consumer protection bureau and adding new rules for largely
unregulated financial instruments.
Working with the White House and Treasury officials, Democrats
on Tuesday replaced the bank and hedge fund fee with $11 billion
that would be freed by ending the government's authority to use the
$700 billion bank bailout fund, known as TARP.
The bailout fund was scheduled to expire in October. The new
proposal would end it as of June 25, essentially cutting Congress'
spending authority from $700 billion to $475 billion. That would
create an accounting adjustment that would generate $11 billion.
The balance of the cost could be covered by increasing premium
rates paid by commercial banks to the Federal Deposit Insurance
Corp. to insure bank deposits. The premiums would increase from
1.15 percent of insured deposits to 1.35 percent by September 2020.
The additional premium would be paid by banks with assets greater
than $10 billion.
Republicans weren't pleased.
"The American taxpayer should be affronted by this little bit
of sleight of hand and gamesmanship," said Sen. Judd Gregg, R-N.H.
"What a piece of misleading, misdirected financial management this
(Copyright 2010 by The Associated Press. All Rights Reserved.)