A raw deal for Republicans on financial regulatory reform

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Jon Ward
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      Jon Ward

      Jon Ward covers the White House and national politics for The Daily Caller. He covered the last two years of George W. Bush's presidency and the first year of Barack Obama's presidency for The Washington Times. Prior to moving to national politics, Jon worked for the Times' city desk and bureaus in Virginia and Maryland, covering local news and politics, including the D.C. sniper shootings and subsequent trial, before moving to state politics in Maryland. He and his wife have two children and live on Capitol Hill. || <a href="mailto:jw@dailycaller.com">Email Jon</a>

One day after Republicans said they had secured a deal on a financial regulation bill that would allow them to move forward on debating the bill, they denounced the legislation and said it would not accomplish any of their goals for preventing bailouts or making the markets more secure.

“The legislation that we are about to consider will help the likes of Goldman Sachs, but will harm the American people,” said Sen. Richard Shelby, Alabama Republican and ranking member on the Senate Banking Committee.

“It will lead to job losses, lost opportunities for businesses to productively invest in the future, and it will ensure future bailouts,” Shelby said on the Senate floor.

Shelby, who said Wednesday that Banking Committee Chairman Chris Dodd, Connecticut Democrat, had given him assurances that he would make sure the regulatory reform bill ended any chance of bailouts for large financial institutions, said Thursday that the bill still contained the provisions he objected to.

“I appreciate his assurances and take him at his word, but I am concerned that there appear to be no substantive changes in the relevant sections of the bill that would reflect such assurances,” Shelby said of Dodd.

It was an acrimonious start — despite the encomiums voiced by both sides — to a debate that is expected to take at least two weeks. Republicans ended their filibuster of the bill Wednesday after Senate Majority Leader Harry Reid, Nevada Democrat, said he would keep them in the chamber through midnight to make them sustain their blocking maneuver.

The GOP complaints on Thursday indicated that the main reason the party dropped their filibuster was to avoid the physical and political toll of the all-night exercise.

Dodd, responding to Shelby, said he and others had “done that work” to ensure the bill does not offer bailouts to big firms, but added: “I respect the fact that others have additional ideas on how we can make this work even better.”

Neither Dodd nor his staff have gone into detail to rebut the specific criticism that says the bill will give the Federal Deposit Insurance Corporation too much flexibility in how it treats creditors of a large financial firm in the event the big bank or firm needs to be shut down.

That is one of the reasons that Republicans believe investors — especially those with political connections or leverage — will flock to large firms on the hunch that if the firm they pour money into goes down they will be repaid by the government.

Another Republican that has been involved in talks over the derivatives portion of the bill for months, Sen. Saxby Chambliss of Georgia, ranking member on the Senate Agriculture Committee, lashed out at the Obama White House for directing his counterpart, Committee Chairman Blanche Lincoln, Arkansas Democrat, to stop negotiating with him.

“I wish we were here today debating a derivatives product that had input from senators on both sides of the aisle and perhaps less input from the administration,” Chambliss said. “I am certain we could have done a much better job had we been allowed to work together in a bipartisan way.”

Chambliss argued that the bill goes too far in regulating derivatives, to the point that “it will have undesirable consequences for Main Street businesses and consumers who are already struggling in this weakened economy.”

Lincoln argued that the bill will “bring 100 percent transparency to what is currently a completely unregulated and dark marketplace,” and said the regulation “recognizes the importance of these markets.”

While Republican complaints about bailouts and overly burdensome derivatives regulation, which the White House reportedly opposes as well, have been consistent for some time, the GOP increased protests this week against the third stool of the reform bill: the consumer protection agency.

Shelby described it in Orwellian terms.

  • Per Kurowski

    The current debate in the US congress on financial regulatory reform is truly surrealistic.

    The SEC on April 28, 2004, when it allowed the US investment banks to substantially increase their leverage, it did so explicitly stating that “the consolidated computations of allowable capital and risk allowances [be] prepared in a form that is consistent with the Basel Standards”.

    If there is anything that has guided the evolution of the current financial regulations, those that I have for so long sustained doomed the world to exactly the type of crisis we now have, that is the Basel Committee. Basel’s AAA-bomb was ignited on June 26 2004, when the G10 countries, which includes the US endorsed the revised capital framework for banks known as the Basel II standards.

    Currently, in the over 1300 pages of financial regulations being discussed in the Congress, there is not one single reference to the Basel Committee or its standards. Can it be more surrealistic than that?

  • BEVERLYCHARBON

    Why in God’s name would Republicans trust anything their Dem “colleagues” in Congress say they will do??? I can’t believe they caved, thinking the Dems would live up to their word. In the first place, why are corrupt politicians like Dodd, Frank, et al still members of Congress at all???? So much for Senate Ethics Committee. Obama and this administration/Dem Congress are about as despicable as they come. Be sure to get out and vote in Nov 2010 and also in 2012 so we can get rid of some of these cretins that are destroying this country!!!~

  • suertecita

    Wow, what a shock. Democrats lie to your face and “promise” to do what you want. So you let them go forward, and as they pass you by, they stab you in the back. Well, you know what republicans, you kind of deserve it. Everybody and their mom knew that would happen. When will you ever learn?

  • oldguy5

    Why would anyone believe anything a democrat says. Vote Republican, at least they are not as bad as dems.

  • http://www.facebook.com/people/Thomas-Berquist/100000269520591 Thomas Berquist

    When will the Republicans learn that the current progressive Democrats have NO PROBLEM WITH LYING, CHEATING, CORRUPTING AND MISLEADING TO GET WHAT THEY WANT. GO NO FURTHER THAN OBAMA TO SEE THAT LESSON EACH DAY AS HE LIES TO THE AMERICAN PUBLIC.

    • rick013

      Isn’t that the socialist way?