By Silla Brush - 06/24/10 01:32 AM EDT
Democrats finalizing a 2,000-page bill that would overhaul Wall Street are moving to satisfy a handful of Republican senators whose votes may be necessary to pass the legislation.
The Democrats’ vote-counting strategy is strikingly different than on healthcare reform, which every congressional Republican opposed.
In the final hours of the two-week conference process, Democrats are also working behind the scenes to bridge internal party splits over a highly controversial provision from Sen. Blanche Lincoln (D-Ark.) that would restrict banks’ derivatives trading. Scores of centrist and New York House lawmakers in a series of letters this week have raised concerns or outright opposition to the provision. House Democratic leaders were holding a series of negotiations on the issue, and centrist New Democrats and New York members were preparing for a meeting with Lincoln.
The efforts come as Democrats vow to finish the bill before the July 4 recess and hand President Barack Obama a second major domestic policy victory this year before the elections.
Feingold this week reiterated his view that the financial bill is not strong enough, underscoring the need for Senate Democrats to shore up at least a handful of Republican votes.
House Financial Services Committee Chairman Barney Frank (D-Mass.), who is also chairman of the conference committee, said the derivatives issue is not a vote-counting problem on the bill and that the legislation is much stronger than even he had once thought was possible.
“It’s a substantive problem for us,” he said. “We started in our own end zone and we’re now in the opposition’s 10 … It will be stronger than almost everyone predicted it could be.”
To help ensure GOP backing for the bill, senators on the conference committee have been working hard to support two provisions that were backed in May by Snowe and Collins.
Snowe worked hard in the upper chamber to limit the impact on small businesses from a new consumer financial protection regulator.
She pushed for an amendment in the Senate to support review panels for the impact of the consumer regulator on small business. House lawmakers on the conference committee looked to strike the regulatory analyses, but the senators are sticking by Snowe’s side.
Lawmakers and regulators, meanwhile, are engaged in negotiations on a complicated provision about capital requirements for large banks. Collins backed an amendment during the Senate debate that drew loud opposition from the financial industry. Collins received strong support for the amendment from Federal Deposit Insurance Corporation (FDIC) Chairwoman Sheila Bair, who on Tuesday said the amendment would “encourage renewed lending by placing the banking system on a sounder footing with real, tangible common equity.”
Senate Banking Committee Chairman Chris Dodd (D-Conn.) and Collins have been in “constant contact,” according to her spokesman, and Collins told Dodd she would support a five-year phase-in for new requirements on complicated instruments known as “trust preferred securities.”
Democrats are also tackling concerns raised by Brown about the impact of a controversial part of the bill known as the “Volcker rule,” which aims to limit risky trading on Wall Street. The rule seeks to ban proprietary trading at big banks and limit their ability to sponsor hedge and private equity funds.
During negotiations leading up to the Senate vote in May, Brown voiced concerns that the amendment would hurt Massachusetts financial firms. He also expressed concern that the amendment’s sponsorship provisions would hurt asset management firms.
After receiving assurances his concerns would be taken up later, Brown switched his vote in favor of the motion to end debate on the bill. He then cast his vote in favor of it.
Lawmakers continued Wednesday to negotiate the specifics of the provision; aides and financial industry sources said it was heading in the direction of addressing some or all of Brown’s concerns.
The twists and turns on the three provisions were part of a final 36-hour stretch of conference committee proceedings.
Lawmakers late on Wednesday were still debating somewhat lower-profile issues, including regulation of broker-dealers and insurance agents and regulation of equity-indexed annuities.
House lawmakers, particularly Frank and Rep. Paul Kanjorski (D-Pa.), have pushed to extend a fiduciary duty to broker-dealers and insurance agents. The Senate has resisted those moves, opting instead for requiring a study before new rules are issued.
The conference committee is expected to approve the legislation on Thursday. Democrats are aiming to pass the Wall Street bill by the end of next week.