Although Senate Banking Committee Chair Chris Dodd and his sometime Republican ally Richard Shelby continued to make noises on the Sunday talk shows about a possible bipartisan deal, both President Obama and House Financial Services Chairman Barney Frank have personally urged Dodd not to cut a deal with Republicans. I asked Frank point blank why Dodd would want such a deal, and he said–on the record–"I have no idea, but both President Obama and I have urged him not to."
This is a welcome sign that Obama realizes that public opinion is moving in the direction of tougher banking reform, and that he learned from the health debate that bipartisan compromise on key reform issues is a snare and a delusion. Kudos to Chairman Frank and to the President.
Assuming that Dodd doesn’t cave, the Democrats still need 60 votes if Republicans decide to filibuster the motion to take up the bill. But with tide turning strongly against coddling Wall Street, it is hard to imagine that a few Republicans won’t break ranks. If so, there may be no filibuster at all.
On one of the most contentious issues, derivatives reform, Maine Republican Senator Olympia Snowe sent a letter to Majority Leader Harry Reid on Friday urging him to back Senator Blanche Lincoln’s tough derivatives provision, which not only narrows exclusions in the draft legislation, but keeps big banks from trading derivatives for their own accounts. It’s hard to imagine Snowe backing this measure and then joining in a filibuster to block consideration of the reform altogether. Here is part of her letter:
"I believe that strong derivatives regulation goes to the heart of an effective financial reform bill and that Chairman Lincoln’s legislation is a strong step towards realizing this fundamental component to financial reform……I believe that we should err on the side of caution and finally bring full transparency to these markets once and for all and allow regulators to preemptively identify these damaged firms.
"Accordingly, I believe the Senate should start with a comprehensive, strong derivatives reform proposal and defend attempts to weaken it, not the other way around and the legislation produced by the Senate Agriculture Committee includes the strongest safeguards and most robust transparency provisions on our expansive derivatives market.
I urge the Majority Leader to incorporate these provisions into the regulatory reform bill."
Then we have the case of the accidental senator from Massachusetts, Scott Brown, who is facing re-election in just two years. His special election last January was a fluke–a perfect storm of voter backlash against recession and a weak Democratic campaign. Brown ran as a kind of regular-guy economic populist. I can’t believe that Brown will stand up for Wall Street against Main Street and vote to filibuster against even taking up the bill (Elizabeth Warren should run for the Democratic nomination to take him on in 2012. Now that would be one helluva race.)
