President Obama tried Monday to portray the Senate’s vote on financial regulation as a simple, black and white case of Republicans blocking needed progress on Wall Street reform.
But not many lawmakers – even those who voted to move forward Monday and those who want to vote for the bill – were buying the argument. And in fact, one Democrat joined with Republicans to vote against the motion to move to debate.
The White House shot out a statement from Obama soon after Senate Majority Leader Harry Reid, Nevada Democrat, failed to attract the 60 votes necessary to move forward with debate of the bill. The bill fell short by a count of 57-to-41.
“I am deeply disappointed that Senate Republicans voted in a block against allowing a public debate on Wall Street reform to begin,” Obama’s statement said.
But key lawmakers stepped on his message, indicating what informed observers have known and most senators have said all along: Republicans and Democrats are both in favor of reform and are working hard to resolve remaining differences, which are complicated and may take some time to work out.
“It wasn’t necessary to have a vote today. Discussions are going along in good faith,” said Sen. Olympia Snowe, a Maine Republican who the White House had hoped might defect from the GOP to help Reid push the bill through to the debate phase.
“There are some concerns about the legislation, and we want to make sure they are addressed,” Snowe said after the vote.
She offered a simple reason for why the White House and Reid pushed to move forward Monday: “It’s politics trumping policy.”
Sen. Ben Nelson, Nebraska Democrat, joined with Republicans to oppose Reid’s motion on the bill, citing concerns about the bill’s impact on car manufacturers in his state.
Snowe also said that Republicans have added need to hold out in unanimity against the bill to gain leverage in negotiations, in particular because they have not been assured by Reid that he will not block them from offering amendments to the bill during debate.
Sen. Mark Warner, the Virginia Democrat who has been closely involved in negotiations, said that concerns being raised by Republicans about potential bailouts of large financial institutions are legitimate.
“There are parts that need to be tightened,” Warner said, referring to the bill in the same manner as Sen. Richard Shelby, Alabama Republican and ranking member on the Senate Banking Committee.
Warner said he wants to see the Federal Deposit Insurance Corporation “have a resolution ability” – or in other words be able to shut down big banks or financial institutions that are on the verge of disorderly failure – without having so much flexibility on which creditors it pays back that investors flock to big targets knowing they’ll get bailed out if the firm they’re attached to goes down.
A large group of Shelby’s staff – 10 aides in all – held a detailed, hour-long background briefing with reporters Monday to go over why the bill would in their opinion encourage more risk by Wall Street, not less.
And on the issue of derivatives – the highly complex financial instruments that almost all experts agree got out of hand on Wall Street – Sen. Judd Gregg, New Hampshire Republican, released comments by the Federal Reserve that were highly critical of Democratic proposals.
Senate Agriculture Committee Chairman Blanche Lincoln’s idea to prohibit banks from trading derivatives – which was reported Sunday to be in the current version of the legislation – “would impair financial stability and strong prudential regulation of derivatives,” said the document released by Gregg, which an aide said was “distributed this weekend at the request of interested Senate offices.”
The Federal Reserve document also said the Lincoln proposal “would have serious consequences for the competitiveness of U.S. financial institutions, and would be highly disruptive and costly, both for banks and their customers.”
The White House, however, released a statement Monday that supported Lincoln’s proposal, saying it would help create “a more stable financial system with better protection for consumers and investors.”
Gregg, who was a bipartisan enough figure to be nominated by Obama for Secretary of Commerce in 2009 before withdrawing from consideration citing irreconcilable differences, railed against Lincoln’s proposal.
Gregg called the proposal by the Arkansas Democrat, who is in an uphill reelection fight, “rampant pandering populism.”
“It’s just penal. That’s the purpose of this: punitive. And in the end it’s going to cut off our nose to spite our face,” Gregg said. “Because it’s going to be our credit that contracts … This is Main Street that will be affected by this language.”
Even Senate Minority Whip Dick Durbin, Illinois Democrat, who could usually be counted on to castigate the GOP for obstructionism despite much evidence to the contrary, gave grudging acknowledgment that the issue is disagreement over how to reach a shared goal.
“I think we’re moving to the point now where even the Republicans believe we’ve got to do something,” Durbin said on CNN.
Nonetheless, late Monday Reid scheduled another vote for Wednesday that will seek again to move the bill to the floor for debate.
“This is going to be a very tough week to be a Republican: If they want to vote to protect Wall Street like they did last night, we’re going to make them do it again and again,” Reid spokesman Jim Manley told Politico. “We will make sure that by the end of this week there’s no question in anyone’s mind about the fact that Republicans are protecting Wall Street over the interests of hard-working Americans.”