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.
“This massive new government bureaucracy has authorities and powers to call you forward and ask you, under oath, about your personal financial affairs,” he said. “The fact so many are looking the other way on these serious threats to our civil liberties is troubling.”
Shelby staffers earlier this week compared the CPA to the Bush administration’s “total information awareness” program, which even after the 9/11 attacks caused concern about too much government over reach into citizen’s lives that it was defunded by Congress in 2003.
The Democrats’ stated objective for the CPA’s Office of Financial Research is to give the federal government better tools to know the state of the economy on a day to day, minute-to-minute basis, so they can act to prevent future crises before they spin out of control.
But Shelby staffers, speaking on background, said it would be “personal financial information, collected by the government, put into a data center.”
“This office can request and gather under subpoena all manner of financial data,” the staffer said. “This deposit activities from every individual in the country, this is small business data loans, this is a whole host of things that this new bureau would have authority and access to for every day Americans.”
The Shelby staff said that the database files would be handed over to Wall Street banks for their use, citing information on an advocacy group’s Web site that said Morgan Stanley has estimated the database will reduce their operating costs by 20 to 30 percent.