Republicans relent, clear financial reform bill for debate

After three failed procedural votes this week, Senate Republicans Wednesday allowed Democrats to move financial reform legislation to the floor by unanimous consent.

Republicans say they won important concessions during the three days of delay, including assurances that Democrats would drop a $50 billion fund to be used in major bankruptcies. They claim that the money, which would have been collected from banks, would act as a permanent bailout fund.

But hopes among Republicans faded that they could address their other major concerns – including the powers of a new consumer-protection agency and the regulation of derivatives – though back-room negotiations.

With an impasse looming, Republicans relented. By doing so, they are conceding that the only way they can further change the financial reform bill is through amendments, which must get 60 votes to avoid a filibuster.

"It’s a clear sign that Republicans understood that they were losing this public relations battle,” says Norman Ornstein, a congressional expert at the American Enterprise Institute in Washington. “Now, they can continue negotiations, so both sides can declare victory and have a bill they can vote for.”

The decision to back a move to the floor doesn’t ensure passage. Democrats still need at least one Republican vote to pass the reform – and perhaps two votes, given that one Democratic senator, Ben Nelson of Nebraska, has been siding with the Republicans in their blocking techniques.

Weeks of debate ahead

Once the 1,400-page bill hits the floor, debate and votes on amendments could go on for weeks.

“We’re going to have a very busy couple of weeks coming up now,” said Sen. Christopher Dodd, who as the chairman of the Senate Banking Committee will be managing the bill on the floor. “There are lots of members who have very strong feelings about this bill.”

For one, Republicans hope to curb the proposed independent consumer protection agency – an agency that they say could harm small businesses that extend credit, including dentists, car dealers, and small manufacturers.

“This massive new bureaucracy would have unchecked authority to regulate whatever it wants, whenever it wants, however it wants," said Sen. Richard Shelby (R) of Alabama, the ranking member of the Senate Banking Committee. "I am aware of no other arm of the federal government this powerful, yet so unaccountable,” he said, adding that he could not support the bill in its current form.

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