Insider poll: Financial reform passes in 2010, Fed audit bill fails

Washington insiders overwhelmingly believe Congress in 2010 will pass new regulations on the financial industry.

According to a new poll by FD, a communications and strategy firm, 76 percent of Washington insiders say financial regulations will head to President Barack Obama’s desk this year.

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The House in December passed a wide-ranging package of regulations on a sharply partisan vote without any Republican support. Senate Banking Committee Chairman Chris Dodd (D-Conn.) said Friday bipartisan negotiations on his panel reached an “impasse” and that he would draft overhaul legislation by the end of February.

A similar 74 percent of insiders believe Congress will not pass legislation requiring an audit of the Federal Reserve’s monetary policy. The Fed has come under heavy criticism this year for its role in propping up the economy and carrying out bailouts of major financial institutions. Federal Reserve Chairman Ben Bernanke received the fewest votes in favor of his confirmation of any Fed chairman.

“Despite the heat and light generated around the hearing and the toughest re-nomination vote in the history of the Fed, Washington insiders clearly believe Congress will honor the Fed’s independence when it comes to monetary policy,” said Travis Larson, senior vice president in FD’s public affairs practice. “That’s good news for the business and finance communities, who view congressional influence in monetary policy as undermining economic certainty and stability.”

Rep. Ron Paul (R-Texas), a longtime critic of the Fed, is the main backer of a new audit of the Fed that has become a major rallying cry for grassroots activists across the political spectrum. The broad legislation that passed the House included the audit measure. More than three-quarters of the House had cosponsored a separate bill backed by Paul to audit the Fed.

The FD survey included 300 insiders working in lobbying, government, media, nonprofits and think tanks, among other associations. The poll was conducted between Jan. 31 and Feb. 1 with an error margin of 5.7 percent.

Of the 300 respondents, 22 percent were self-identified Republicans, 23 percent independents and 49 percent Democrats. Five percent considered themselves having a different affiliation.

The poll showed that insiders strongly believe Obama will attempt to move to the political center this year and that Congress will not pass healthcare reform, a limit on greenhouse gas emissions or new restrictions on campaign finance.

Roughly half of the respondents said the recent Supreme Court decision allowing corporations and labor unions to spend more freely on elections would benefit Republicans. Only 6 percent said it would primarily benefit Democrats, while 42 percent said it would benefit the two parties equally.

On the Fed’s independence, 27 percent of self-identified Republicans said they thought Congress would pass legislation auditing the Fed’s monetary policy. That was compared to 16 percent of self-identified Democrats. But 31 percent of Republicans and 25 percent of Democrats said they personally supported an audit.