After two days of angry partisan arguments in Washington over the issue of financial regulation reform, a Republican senator from Tennessee summed up the state of play.
“It’s feeling a little weird,” Sen. Bob Corker said late Thursday to reporters.
“But I hope that’s going to change.”
Corker was referring to his sense that the White House and Democratic leaders may not be willing to compromise and accept Republican amendments to the final bill, but his remark was a fitting description of the entire debate.
Senate Minority Leader Mitch McConnell became a magnet for criticism over the two days, after he blasted the bill currently being written by the White House and Sen. Chris Dodd, the Democrat from Connecticut who chairs the Senate Banking Committee.
The White House bill, McConnell said Wednesday on the floor, would produce “endless bailouts” of large banks and financial institutions.
McConnell’s comment lit a fuse.
Dodd took to the floor not long after McConnell to denounce the Republican’s criticisms as “poppycock.” The White House went after the Kentucky Republican with some of the same arguments as Dodd, accusing him of using poll-tested rhetoric for partisan gain.
“The allegation is a poll-tested focus-grouped phrase that Frank Luntz gave to the Senate Republicans. It’s not true, it flies in the face of the facts, and it is incredibly hypocritical,” White House communications director Dan Pfeiffer said by e-mail.
“The reality is that Republican leadership has teamed up with Wall Street to oppose reform,” he said.
But it was comments from two Republicans and centrist Democrats that created a sense that McConnell — known for being a crafty master of parliamentary procedure who rarely gets into trouble on public messaging — may have been overreaching by attacking the financial reform bill so vociferously.
Sen. Mark Warner, Virginia Democrat, was the first moderate to respond to McConnell, saying in an interview that the Republican “either doesn’t understand or chooses not to understand” the legislation.
Also Wednesday, Sen. Judd Gregg, the ranking Republican member on the Senate Budget Committee, said McConnell’s criticisms were “a touch over the top,” though he did not disagree with the basic thrust of his leader’s comments.
Then Thursday, Corker was quoted as saying senators should “act like adults” when talking about the regulatory reform measure, an apparent rebuke of McConnell’s comments.
And Democrats made much hay out of comments by Federal Deposit Insurance Corporation chair Sheila Bair, who said the bill as written would “make bailouts impossible.”
But McConnell did not back down from his accusation, and by late afternoon Thursday he was getting help from House Republican leadership, who sent out a memo detailing why the regulatory reform in its current form would create a “permanent bailout for Wall Street.”
It was comments by Corker, during an interview with Ezra Klein of the Washington Post on Thursday, that went some way toward dispelling the notion that McConnell was being abandoned by his own team.
“I’ve cautioned against hyperbole. But the fact is that the bill as it now is written allows numerous loopholes that allow a situation where you could have bailouts in perpetuity. It’s a fair statement,” Corker said of McConnell’s rhetoric.
Corker went into great detail to explain that the provisions that in his opinion weakened the bill were extremely complicated.
“There’s some bankruptcy court language that’s not in here. There are some issues regarding judicial review of the FDIC’s activities. Some of these things, if you read the language, the FDIC could have the ability to inject equity into the company. They want something called incidental powers. Unless things are clearly defined, they can cause problems. The biggest issue is narrowing what the Fed is able to do, what the FDIC is trying to give itself in order to create flexibility.”
Boehner’s office also sent out a detailed explanation for why they the current regulatory plan will “institutionalize ‘too big to fail’,” by The American Enterprise Institute’s Peter Wallison.
“The bill authorizes the Fed to regulate all non-bank financial institutions that are ‘systemically important’ or might cause instability in the U.S. financial system if they failed,” Wallison wrote. “These words mean something — that the companies designated for Fed regulation are too big to fail. It’s so obvious that it should not have to be repeated, but it seems that Dodd and the administration believe that as long as they don’t actually say these companies are too big to fail no one will notice.”
Democrats pointed out, however, that banks would not be lobbying against a bill that guaranteed bailouts.
Still, late in the day, it appeared that Corker was not happy with the heated rhetoric that had issued forth from McConnell.
“I don’t think all this rhetoric that’s taken place over the last 48 hours — I think it’s been sort of sidetracking things a little bit and hopefully we’re going to get back to focusing on a good bill,” Corker said.
“This is not like health care,” he added. “Republicans really want a bipartisan financial bill.”