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Voting begins in US Senate on Wall Street reform

Voting begins in US Senate on Wall Street reform
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First Published: Tue, May 04 2010. 10 27 AM IST
Updated: Tue, May 04 2010. 10 27 AM IST
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* Obama’s bank tax proposal to be discussed by committee
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Washington: The US Senate will cast its first votes on Tuesday on a sweeping Wall Street reform bill, with passage of a handful of uncontroversial amendments expected and a key procedural question still unsettled.
Democratic leaders had not yet determined as of late Monday whether amendments will need 50 or 60 votes to pass. The difference is important because Democrats control 59 votes in the 100-member chamber, versus the Republicans’ 41 votes.
A 60-vote rule would make winning passage for any amendment — and there are more than 100 circulating — more difficult, while a 50-vote rule would open the way to all sorts of proposals from both Democrats and Republicans.
A spokesman for Senate Democratic Leader Harry Reid said that no decision had been reached and that votes would be handled on a case-by-case basis for the time being.
“This is an issue for leadership to decide. ... A higher threshold will bring more order to the chaos of the amendment process,” said Jaret Seiberg, an analyst at Concept Capital.
When the process is over, likely in two to four weeks, final passage of the bill looks likely, given a surge in political momentum for it from the Goldman Sachs fraud case and the approach of November’s elections, analysts said.
Wall Street reform is a top domestic policy objective of President Barack Obama, who laid the foundations for the Senate bill in mid-2009 with a raft of proposed reforms meant to prevent a recurrence of the severe 2008-2009 financial crisis.
While the economy was still deep in recession in December, the House of Representatives approved a bill that embraced many of the Obama administration’s ideas for tougher oversight and stricter limits on banks and capital markets. The European Union is pursuing its own agenda for reform as well.
Boxer Amendment to Come First
In the Senate, the nearly 1,600-page main bill was developed over six months of bipartisan negotiation led by banking committee chairman Christopher Dodd. The very first amendment is expected from Democratic Senator Barbara Boxer.
She wants to add language saying that no taxpayer funds could be used again to bail out financial institutions — an idea likely to gain wide support from both parties.
The Bush administration’s bailouts of Goldman, AIG, Citigroup, Bank of America and other financial giants set up a political backlash that has only grown as the firms’ executives, in hearings on Capitol Hill, have done a poor job explaining their errors and their massive bonuses.
Besides Boxer’s measure, other early amendments to the bill will reflect the latest deal between Dodd, and Senator Richard Shelby, the top Republican on the banking committee.
Analysts said Dodd has agreed, at the Republicans’ insistence, to drop a proposal to create a $50 billion fund, paid into by large financial firms, that would help pay for liquidating one or another of them when they get in trouble.
Dodd himself has not confirmed that agreement, however.
Nor did he have any comment on Monday about the status of a controversial provision that would require banks to spin off their swap-trading desks as part of imposing new rules on the unpoliced, $450 trillion over-the-counter derivatives market.
Senate support was slipping for that proposal, according to analysts and sources close to discussions among lawmakers.
As the debate unfolds on the floor, the tax-writing Senate Finance Committee will be holding a hearing on Tuesday on the Obama administration’s bank tax proposal. It would impose a levy of 0.15 of a percentage point on the balance sheets of financial companies with assets exceeding $50 billion, raising as much as $117 billion, as originally proposed in January.
Treasury secretary Timothy Geithner will testify on the proposal, intended to reimburse taxpayers for the bailouts.
The bank tax is not part of the Dodd bill, but analysts said chances of it being approved would be boosted by deletion of the $50 billion liquidation fund targeted by Republicans.
“If the $50 billion resolution fund is removed, there will be pressure to fill a $17 billion ... funding gap, with a bank tax as a potential fix,” said Paul Miller, an analyst at FBR Capital Markets.
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First Published: Tue, May 04 2010. 10 27 AM IST