Research Briefing

Despite Obama's And Reid’s Best Efforts, Republicans Win Concessions Against Wall Street

DESPITE THE OBAMA-REID’S POLITICAL THEATER, GOP WINS CONCESSIONS AGAINST WALL STREET BAILOUTS

The Los Angeles Times Says Reid’s Partisan Push “Was Largely Political Theater.” (Janet Hook, “GOP Senators Block Debate On Finance Bill,” The Los Angeles Times, 4/27/10)

• White House Aides Were “Practically Giddy About” Failed Votes. “In the last two days, the White House has lost two straight votes in the senate that would have moved the massive overhaul of the financial system along. … but don't feel bad for the west wing. Obama aides are practically giddy about the turn of events.” (Michael D. Shear, “White House Keeps Losing Votes -- And Loving It,” The Washington Post, 4/28/10)

But After Republican Pressure, Sen. Chris Dodd (D-CT) Agrees To Drop The Bailout Fund From his Bill, All But Acknowledging Harm It Would Create. “In a concession, Mr. Dodd agreed to drop the establishment of a $50 billion fund designed to pay for the liquidation of a failed firm, people familiar with the matter said. That money would have been collected in advance from large financial firms. Republicans have criticized the fund, saying it amounted to a permanent bailout fund.” (Greg Hitt and Damian Paletta, “Senate Standoff On Financial Bill Nears End,” The Wall Street Journal, 4/28/10)

• Democrats Made “Huge Concessions” To Republicans On “Dealing With Failing Financial Institutions” In Order To Advance The Debate. “After Democrats made what one senior GOP aide called ‘huge concessions’ on aspects of the bill dealing with failing financial institutions, Senate Republicans were scheduled to meet this afternoon to consider whether to allow the chamber to begin debate on the bill.” (Steven Sloan and Joseph J. Schatz, “Republicans Huddle On Whether to Allow Debate On Senate Financial Overhaul,” CQ, 4/28/10)

Bipartisan Talks Were Successful Despite Reid Calling Opponents Of Current Bill As “Anti-American.” “‘But all the talk of the Republicans about wanting to do something about this before it gets on the floor is really anti-Senate and anti-American,’ Reid told reporters.” (Eric Zimmerman, “Reid Calls Filibuster 'Anti-American,'” The Hill, 4/28/10)

• And Trashing Negotiations Between Dodd And Shelby. “And I say to my friends on the other side of the aisle again, let's stop talking about this negotiation. It's going nowhere.” (Sen. Reid, Floor Remarks, 4/28/10)

Bipartisan Talks Were Successful Despite Obama’s Effort To End Negotiations Three Times To Use Financial Regulation Debate As Political Weapon. “[S]ome Democrats believe continued action after health care reform will show real momentum for their agenda. But others argue that the White House would be better off -- politically, anyway -- if Democrats could hit the campaign trail in the fall and blame ... Republicans for blocking the reform bill.” (Manu Raju and Eamon Javers, “Dems Bristle At Reform Deadline,” Politico, 4/5/10)

• FEBRUARY: White House Pulled Sen. Chris Dodd (D-CT) Away From Negotiation With Sen. Richard Shelby (R-AL). “Just six days earlier, Dodd had said he hit an impasse with Senator Richard Shelby, the committee’s top Republican, in talks that have dragged on for more than a year over tightening oversight of banks and capital markets ... Gregg said he believes Dodd and Shelby had an agreement on consumer protection before talks broke off. ‘If the white house hadn’t sort of pulled back the Democratic membership on that issue, we could all go forward in a bipartisan way.’“ (Kevin Drawbaugh, “GOP’s Gregg Sees Progress On Financial Regulation,” Reuters, 2/12/10)
  
  
• MARCH: White House Pressured Dodd To Abandon Bipartisan Negotiations With Sen. Bob Corker (R-TN). “Dodd announced Thursday he would schedule a committee markup the week of March 22 even though he and Sen. Bob Corker (R-Tenn.) had not struck a final deal... Corker said negotiations were on ‘the 5-yard line’ and blamed politics ... for complicating the talks ... ‘There is no question that White House politics and healthcare have kept us from getting to the goal line,’ ...” (Silla Brush, “Banking Chairman Dodd To Go It Alone On Financial Overhaul,” The Hill, 3/11/10)
  
  
• APRIL: Sens. Blanche Lincoln (D-AR) And Saxby Chambliss (R-GA) Were Nearing Bipartisan Deal On Derivatives Until “White House Raised Objections To A Potential Compromise.” “White House officials have raised objections to a potential compromise between Democrats and Republicans on the Senate Agriculture Committee regarding rules governing derivatives trading ... The pressure from the White House and Treasury Department could complicate the broader congressional effort to rework financial regulation, as it could derail a bipartisan deal. ... The Senate Agriculture Committee proposal, spearheaded by panel chairman Blanche Lincoln and Saxby Chambliss was seen by many as one of the few parts of the bill that could attract b ipartisan support.” (Damian Paletta, “Hurdle Emerges To Financial Revamp,” The Wall Street Journal, 4/13/10)

NOW REPUBLICANS WILL USE DEBATE ON FINANCIAL REFORM TO PROTECT MAIN STREET

Federal Trade Commission Fears That Current Obama-Dodd Bill Could Have “Overall Result” Of “Less Protection For Consumers, And Fewer ‘Cops On The Beat.’” “The Federal Trade Commission … writes to express its strong and unanimous concerns with certain provisions in the ‘Restoring American Financial Stability Act of 2010,’ which was recently reported by the senate banking committee … We fear that the overall result could be less protection for consumers, and fewer ‘cops on the beat.’” (Federal Trade Commission, Letter To Sen. Hutchison, 4/16/10)

Senator Ben Nelson (D-NE) Said He Couldn’t Vote For Current Obama-Dodd Bill Because It Could Harm Main Street. “We need to regulate Wall Street without doing harm to main street, and I’m hearing from Main Street businesses in Nebraska that have concerns about the current bill adversely impacting them.” (Sen. Ben Nelson, “Nelson Statement On Procedural Vote On Financial Reform,” Press Release, 4/26/10)

• Nelson Worried That Current Obama-Dodd Bill Will Restrict Financing For Small Business Owners. “I have heard from Nebraska business owners and leaders that the underlying bill will extend too far and adversely impact Main Street businesses that use third party financing to help customers pay for their products or services,” Nelson’s statement explained.” (Jessica Brady, “Nelson Rejects ‘Wild Speculation’ On Reasons For His Votes,” Roll Call, 4/28/10)

Far From Wall Street, Job Creators Like Harley-Davidson And EBay Are Worried Financial Reform Could Hurt Their Business. “Harley-Davidson is worried that its dealer-financed loans to bikers will fall victim to new federal financing regulations. And eBay is concerned about possible restrictions on PayPal, a subsidiary, in moving money in the Internet marketplace. . . The lobbying push by these other industries shows just how broadly the legislation could affect businesses.” (Eric Lichtblau and Ron Nixon, “Off Wall St., Worries About Financial Bill,” The New York Times, 4/26/10)

Local Auto Dealers Say Democrats' Financial Reform Bill Goes After “The Wrong People” And Would “Drive Up The Cost Of Auto Financing.” “The dealers say the measure would drive up the cost of auto financing because it would require hiring more people to follow federal regulations. They say it also could limit the types of financial products they offer. ‘It's dangerous and it's aiming at the wrong people,’ said Ed Tonkin, chairman of the National Automobile Dealers Association. ‘It's using a sledgehammer to go after a gnat, and we're not that gnat.’” (Damian Paletta and Victoria McGranae, “Car Dealers Seek Exemption,” The Wall Street Journal, 4/28/10)