WASHINGTON (AP) — Senate Republicans on Wednesday delayed final action on a sweeping financial regulation bill, raising a last-minute obstacle to the legislation as it approached the home stretch.
Democrats appeared within reach of the 60-vote threshold needed to move the bill toward passage, however, and Senate Majority leader Harry Reid said he would seek a new vote Thursday.
The vote and Wednesday’s maneuvering over a handful of remaining amendments represented the final lumps and bruises of a bill that appeared headed for approval.
The legislation, which seeks an overhaul of financial regulations unseen since the 1930s, would set up a mechanism to watch out for risks in the financial system, make it easier to liquidate large failing firms and write new rules for complex securities blamed for helping precipitate the 2008 economic crisis. It also would create a new consumer protection agency, a key point for President Barack Obama.
As the end game on the bill nears, Republicans this week have escalated their attacks on the legislation, arguing the bill had grown worse during its time on the Senate floor and does not address root causes of the 2008 financial meltdown.
The Democratic majority, said Senate Republican leader Mitch McConnell, “uses this crisis as yet another opportunity to expand the cost and size and reach of government.”
The vote to end debate was 57-42, three votes shy of the 60 needed to pass. Three Democrats joined 39 Republicans in voting against the measure. Among them was Reid, the Democratic leader, who switched his vote from yes for procedural reasons.
With Sen. Arlen Specter, D-Pa., absent, Democrats needed one more vote to demonstrate to Republicans that they would eventually prevail and set the stage to pass the biggest rewrite of financial regulations since the Great Depression.
Still, several contentious amendments were still unresolved.
Democratic Sens. Jeff Merkley of Oregon and Carl Levin of Michigan were awaiting a vote on their proposal to ban commercial banks from trading in speculative investments with their own accounts. The measure, also opposed by financial institutions, would toughen an existing provision in the bill.
Senators also were expecting a vote on a measure by Sen. Sam Brownback, R-Kan., that would let auto dealers avoid any regulations passed by a proposed consumer protection agency. The White House has lobbied heavily against the measure and Pentagon officials have complained that auto dealers have preyed on service members.
Late Wednesday, the Senate voted 60-35 against a measure that would have allowed states to impose their interest rate caps on financial institutions that issue credit cards. Currently, banks and credit card companies are only required to charge the interest rate permitted in the state where they are headquartered.
Banks, which have flocked to states with the most permissible rates, have vigorously fought the proposal, offered by Sen. Sheldon Whitehouse, D-R.I.
On Wednesday’s attempt to end debate, Democratic Sens. Russ Feingold of Wisconsin and Maria Cantwell of Oregon broke with their party. Feingold said the bill did not go far enough to rein in Wall Street. Cantwell’s vote protested her inability to get a vote on an amendment to toughen controls on the complex securities known as derivatives.
“The test for this legislation is a simple one — whether it will prevent another financial crisis.” Feingold said in a statement. “As the bill stands, it fails that test.”
Specter, who lost the Democratic primary in Pennsylvania on Tuesday, was not in the Senate on Wednesday. He had been expected to support the Democrats.
Two Republicans — Maine Sens. Susan Collins and Olympia Snowe — voted with the Democrats. Republican Sen. Scott Brown of Massachusetts had indicated he would vote with the Democrats. But when the vote came, he sided with his party.
“A senator broke his word with me,” Reid said, though he declined to identify the culprit.
After the vote, Brown conceded he had approached Reid. “I went to the leader and I said I would be voting for cloture,” he said, using the term for ending debate.
But Brown told reporters that the bill did not include fixes he sought to protect Massachusetts insurance firms and banks that hold money in trust from a prohibition on commercial banks engaging in trades on their own accounts. The changes Brown sought had been blocked by Republicans.
“I don’t care who blocked it. I had assurances that these things were being addressed,” he said. He left the door open to changing his vote Thursday. “I’m confident that something will be resolved.”
On another front, the Senate was expected to let stand a contentious provision that would require banks to spin off their lucrative derivatives business. Senate Banking Committee Chairman Christopher Dodd had sought to break an impasse over how to regulate derivatives by proposing to delay the implementation of the bank restriction by two years.
He backed away from that plan on Wednesday after Sen. Blanche Lincoln, an Arkansas Democrat who has insisted on the spinoff measure, indicated she would oppose his effort. The financial industry also signaled it would not support the delay and Republican Sen. Judd Gregg of New Hampshire likened the idea to a “Mad Hatter’s tea party.”
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Associated Press writers Andrew Miga and Andrew Taylor contributed to this report.