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Financial reform bill takes shape as decision looms on 'Fed audit'

Senate lines up behind some financial reform provisions that get tough on Wall Street, but not all. Rep. Ron Paul alleges that one senator 'sold out' by watering down a provision to audit the Federal Reserve.

By Staff writer / May 7, 2010

Sen. Byron Dorgan, D-N.D. talks about his amendment to the fiancial reform bill to prevent risky activities by the nation's financial institutions, Tuesday during a news conference on Capitol Hill

Manuel Balce Ceneta/AP

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The Senate's financial reform bill moved forward this week, and some key battles about the future of bank regulation are now being settled out in the open rather than in back rooms.

It's a process filled with partisan mudslinging as well as Senate-floor votes.

Rep. Ron Paul (R) of Texas blasted Sen. Bernie Sanders (I) of Vermont for having "sold out" on elements of a Federal Reserve audit that both support. And as senators sparred over other proposed amendments to the bill, the White House and congressional Republicans jabbed at one another with dueling lists of "10 loopholes" allegedly supported by the other party.

At this point, the House has already passed a financial reform bill. Sen. Christopher Dodd (D) of Connecticut put his version out on the Senate floor this week, in a bid by Senate leadership to get a reform bill to President Obama for signing within weeks.

If anything, the Senate process has been tilting toward tighter regulation of Wall Street than the banking industry expected just a few weeks ago. But that doesn't mean that every stringent proposal is winning its way into the bill.

"The final bill will be tougher on the banks than the House bill was, because public opinion [about banks] has hardened," predicts Douglas Elliott, a finance expert at the Brookings Institution in Washington.

Here's what's known after this week's key plays in the Senate:

•A Republican bid to weaken a new consumer-protection bureau, to be created by the bill, failed.

•Republicans won bipartisan support to nix a proposed $50 billion fund that, they said, would perpetuate Wall Street's view that large firms will be bailed out in a future crisis.

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