By Alexander Bolton - 04/16/10 12:14 AM EDT
The fate of a Senate bill that would revamp the nation’s financial regulatory system could hinge on a Republican centrist from Maine.
Sen. Susan Collins (R-Maine) may end up being the deciding vote next week on a Democratic Wall Street reform plan touted by the White House.
A GOP aide said Collins is the only Republican senator who has not signed a letter promising to filibuster a motion to proceed to the bill unless Democrats reopen bipartisan negotiations. The letter has not been made public.
In order to torpedo the measure crafted by Senate Banking Committee Chairman Chris Dodd (D-Conn.), Senate Minority Leader Mitch McConnell (R-Ky.) needs 41 votes.
Feeling the wind at their backs, Senate Democrats say they will vote next week on the legislation. But it’s unclear if they have the 60 votes necessary after an intense whipping effort this week by Senate GOP leaders.
The White House and Senate Democrats, tired of waiting for the GOP and sensing a political advantage, are rejecting Republican calls to engage in more bipartisan negotiations.
McConnell, who kept his conference united on healthcare reform, has faced a tougher test on Wall Street reform. Yet contrary to expectations earlier this week, he has most Senate Republicans behind him.
In recent days, McConnell has lashed out at the president and Democratic leaders for pushing what he calls a “bailout” bill and for not working in good faith with the GOP.
Collins said that she supports some of the provisions in the bill. However, she said she has concerns about Senate Democratic leaders cutting off bipartisan talks after White House officials intervened.
Collins has said that she would like bipartisan talks to continue, but she does not want to box herself in on the issue.
“I oppose Sen. Dodd’s bill,” Collins said Thursday. “I am still talking with my colleagues about whether a letter is the most effective way to send the message, or whether there are better ways, and those discussions are still ongoing.
“I agree with my colleagues that the Dodd bill is deeply flawed,” Collins added. “But, as a former financial regulator, I also feel strongly that the current system is very flawed. We need a financial regulatory bill, just not this one.”
Snowe and Collins are not particularly close, but they usually vote the same way. Both Maine centrists backed the stimulus package and rejected the final healthcare reform bill, though Snowe backed the version that cleared the Finance Committee last year.
Snowe’s office did not comment for this article.
With 59 Democrats in the Senate, McConnell has little margin for error.
Democrats are optimistic they will have the votes. However, they are also working to persuade skeptical members on their side of the aisle.
Sen. Ben Nelson (Neb.), one of the upper chamber’s most conservative Democrats, has withheld support for the legislation because of concerns over new regulations it would place on insurance companies.
In addition to Nelson, Sens. Evan Bayh (D-Ind.) and Ted Kaufman (D-Del.) have reportely held back from endorsing the legislation, a high priority of President Barack Obama’s.
Senate Democratic Whip Dick Durbin (Ill.) said Thursday he is not certain Democrats would have all 59 votes in their conference for a motion to proceed to the bill.
Because of the chances of at least one defection, McConnell will not be able to force Democrats to withdraw the Dodd bill — at least, not yet.
Senate Majority Leader Harry Reid (D-Nev.) told reporters Thursday the legislation would likely hit the floor sometime next week.
“We’re doing our best to get it on the floor as quickly as possible; we hope to get it on the floor next week,” Reid said.
But the public opposition of 41 Republican senators, certified with a signed letter, would be enough to end the suspense and open Dodd’s bill to substantial revision.
A Republican senator told The Hill on Wednesday that 20 to 25 Republican senators would vote for the bill if Dodd made changes to provisions on new powers for the Treasury Department and the Federal Deposit Insurance Corporation (FDIC).
Some Democrats believe Republicans are just seeking more time to run out the clock in the 111th Congress.
And Obama’s advisers believe Wall Street reform is a winning political argument for Democrats.
Democratic pollster Celinda Lake told reporters Wednesday that seniors who lost much of their savings in the 2008 financial meltdown are angry and could be mobilized on the issue.
Democrats have already begun to blast away at Republicans, accusing them of defending big banks that over-invested in mortgage-backed securities and other toxic assets.
“I’ve been very disappointed by the statements of some of my Republican colleagues opposing our efforts on Wall Street [reform],” Reid told reporters Thursday. “They seem clearly focused on protecting these big banks.”
Durbin said, “Republicans have decided it’s best for them to stand up for the biggest banks in America, for them to be the caucus that will defend financial institutions that brought us into this recession.”
McConnell counters that the Dodd bill would put taxpayers at risk for having to pay for future bailouts.
The bill would create a $50 billion fund — funded by financial institutions — to wind down banks that pose a risk to the financial system.
Sen. Bob Corker (R-Tenn.), who worked on the portion of the bill addressing institutions that become “too big to fail,” said Obama administration officials made changes to Dodd’s bill empowering the Treasury Department and FDIC to infuse additional federal funds to keep troubled banks on life support.
McConnell argues this could put taxpayers on the hook for future bailouts because if the $50 billion industry-supplied fund proved insufficient, Treasury and FDIC officials could spend billions of additional dollars to rescue banks.
Republicans note the rescue of AIG Inc. cost about $180 billion.
“Its authors claim that the bill gives the government the authority to wind down failing firms with no exposure to the taxpayer,” McConnell said in a speech Wednesday.
“But as a factual matter, the bill creates bailout funds, authorizes bailouts, allows for ‘backdoor’ bailouts from the FDIC, Treasury and the Fed, and even expands the scope of future bailouts.”
Corker, however, said that lawmakers could easily close the loopholes empowering Treasury and FDIC to infuse additional funds into ailing banks to keep them afloat.
Sen. Charles Schumer (N.Y.), vice chairman of the Democratic Conference and a member of the Banking Committee, has dismissed McConnell’s critique, asserting taxpayer money would not be at risk.
“Sen. Dodd’s bill explicitly says the money that will go for any future bailout for any large institution because it failed has to come from the large institution, not the taxpayer,” Schumer said.