Banking/Financial Institutions

Senate Republicans on Monday blocked a Democratic effort to overhaul the financial system and crack down on Wall Street.

Key Democrats have reached an agreement to include major provisions of a bill to regulate the over-the-counter derivatives market into a larger proposal on financial regulatory reform. 

Senate Banking Chairman Chris Dodd (D-Conn.) and Senate Agriculture Chairwoman Blanche Lincoln announced on Monday that the bill will make the market transparent with real-time price reporting, lower systemic risk by requiring mandatory trading and clearing of swaps through a clearinghouse and require transactions to be traded on a regulated exchange. 

"We have taken the strongest provisions from our two bills," Dodd said in a statement. "Under this agreement we will see derivatives moved through clearinghouses, traded on exchanges and facing tough capital and margin requirements that will help stop Wall Street from gambling with our financial security."

Sen. Carl Levin (D-Mich.) said Goldman Sachs misled investors when selling them mortgage-backed securities.

President Barack Obama called on Congress to pass a financial regulatory reform bill with time ticking away before a vote o to begin debate on the measure. 

Obama advocated combining the bill proposed Senate Banking Chairman Chris Dodd (D-Conn.) and a measure tightening enforcement of the derivatives market sponsored by Senate Agriculture Chairwoman Blanche Lincoln (D-Ark.). 

Passage of the package will "move the nation another important step toward necessary, comprehensive Wall Street reform that will create clear rules of the road and can be consistently and systematically enforced," the statement said. "Thus creating a more stable financial system with better protection for consumers and investors."

The administration will oppose efforts to add loopholes to the bill that "undermine consumer and investor protection or that allow institutions to avoid oversight," the statement said. 

A vote allowing the Senate to begin debate on the bill is scheduled for 5 p.m.

Goldman Sachs didn't have a massive short against the housing market or bet against its clients, CEO Lloyd Blankfein is expected to tell a Senate panel Tuesday.

Blankfein called a lawsuit filed by the Securities and Exchange Commission "one of the worst days in my professional life, as I know it was for every person at our firm," the testimony says. 

"While we strongly disagree with the SEC's complaint, I also recognize how such a complicated transaction may look to many people," he says. 

Goldman Sachs has been accused of committing financial fraud by the SEC, which charges the bank with setting up a mortgaged-back security that was designed to fail. The SEC argues Goldman set up the security by working with a hedge fund that chose the financial instruments that were to be included and then bet against the investment. Read more...

Sen. Banking Chairman Chris Dodd (D-Conn.) urged his colleagues to let debate begin and tackle contentious issues on a financial regulatory reform bill on the Senate floor. 

"How can we resolve the issues if I can't bring up the bill," Dodd said on the floor. "I urge my colleagues to let us get to this debate so we can resolve these matters."

He said even if the bill could come to the floor more talks would need to take place to determine how to manage the legislation on the floor. 

He suggested bringing amendments to the floor. Republicans have suggested trying to work out the bill's major issues including a $50 billion fund to help unwind failing financial institutions and language that ends 'too big to fail.' 

With a cloture vote scheduled in about 90 minutes, Dodd pleaded with Republicans to let a public debate start on the bill saying it was "unrealistic" to think that all issues on the measure could've been resolved before the vote today. 

Dodd and Senate Banking ranking member Richard Shelby (R-Ala.) met this afternoon to discuss the bill ahead of the 5 p.m. vote. All 41 Republicans are expected to vote against allowing debate to start. 

Senate Republicans have said they are opposed to the bill in its current form and will keep Democrats one vote short of allowing debate to begin on the legislation. 

"We have yet to stand up and address what caused this to happen in our country," Dodd said of the 2008 financial crisis. 

The Service Employees International Union (SEIU) on Monday announced that several rallies will occur this week demanding financial reform. The demonstrations will be held at events hosted by some of the country's largest banks. 

"The nation's biggest banks crashed the economy, causing over 8 million to lose their jobs, 1 out of every 8 families facing foreclosure, and cities, counties and states teetering on the edge of bankruptcy," stated an SEIU release on the protests. "Now, these same banks are pouring $1.4 million a day into the Senate to stop Wall Street reform. Ordinary Americans are saying 'enough is enough."  Read more...

Sen. Russ Feingold (D-Wis.) will vote to begin debate on a financial regulatory reform bill tonight but he won't support a measure that isn't tough on Wall Street.

"Preventing even a debate on this critically important issue is a fantasy for the Wall Street banks that seek to undermine the first serious effort to reform financial regulations since their reckless and irresponsible actions triggered the worst recession our nation has experienced since the Great Depression," Feingold said Monday in a statement. 

While supporting debate on the bill, he doesn't support a predetermined amending process or a "template" for floor consideration "that effectively puts the fix in on some negotiated final product." 

Read more...

Senate Republicans may offer an alternate financial overhaul bill if a test vote pushed by Democrats fails on Monday.

As Senate Democrats and Republicans wrangle over legislation to reform Wall Street, a new national poll shows nearly two-thirds of Americans support stricter rules to govern banks and other financial institutions. 

By a wide margin, 65 of Americans say they support tighter regulations on how banks and financial institutions do business with only 31 percent opposed, according to an ABC News/Washington Post poll released Monday. 

The poll also reflects that 52 percent trust the Obama administration to handle financial reform whereas 35 percent say Republicans would do a better job. But it's not all good news for the White House as the public splits evenly at 48 percent as to how well he's handled it so far, although the president has better results with those who want stricter regulations.