By Alexander Bolton - 04/26/10 06:58 PM EDT
The setback will send Democrats and Republicans back to the negotiating table to work out a deal to allow legislation to pass before Memorial Day.
White House press secretary Robert Gibbs predicted the Senate’s test vote would fail, but warned Senate Republicans they would face consequences in voting against the bill when it comes up again.
Gibbs pointed to polling in the Washington Post showing two-thirds of Americans support financial reform. Those numbers, Gibbs said, make the Republicans' opposition to the bill “politically untenable.”
Defeat could pressure Senate Majority Leader Harry Reid (D-Nev.) to bring other legislation to the floor, giving negotiators more time to work out their differences. One possibility is the Food Safety Modernization Act.
But a senior Democratic aide said Reid would stick with Wall Street reform and could force Republicans to vote again to block debate this week.
“Our hope is to continue to move forward with Wall Street reform,” the aide said. “Sen. Reid could move to reconsider the bill.”
The aide declined to discuss the possibility of bringing other business, such as food safety regulation.
Banking Committee Chairman Chris Dodd (D-Conn.) said last week that he would continue to negotiate with Sen. Richard Shelby, the senior Republican on his committee, even if the GOP votes to block debate.
Shelby predicted in a television interview Monday morning on ABC that he would not reach an agreement with Dodd by Monday afternoon, and that Republicans would stick together on the vote.
“I don't believe we’ll have a deal today,” Shelby said.
A senior Senate GOP aide accused Democrats of “headline hunting” after the party began jockeying early Monday to mold media coverage of the vote.
“Today, Republicans face a major choice: Will they stand up for the American people, and join us to hold Wall Street accountable for the reckless gambling that cost 8 million Americans their jobs and millions more their economic livelihood?” Jim Manley, Reid’s spokesman, said in a release.
“Or will they follow the marching orders they've been getting at their secret, closed-door meetings with Wall Street executives, and continue to protect Wall Street?” he added.
Democrats will try to put more political pressure on Republicans by holding a hearing Tuesday highlighting allegations of fraud against Goldman Sachs, one of Wall Street’s preeminent banks. Sen. Carl Levin (D-Mich.), chairman of the Senate’s Permanent Subcommittee on Investigations, will chair the session.
Shelby might try to give his GOP colleagues political cover by advancing an alternate Republican proposal to reform Wall Street.
“We have been drafting an alternate approach from the very beginning,” said a GOP aide.
During internal GOP conference discussions, centrists have expressed concern that if they voted to block the Democratic bill they would need to show support for other solutions to reforming the financial system.
“If we’re against this, what are we for?” said a centrist GOP senator.
Gibbs scoffed at reports that Republicans will produce their own reform bill, saying: “I can't imagine that anybody believes that that's going to be a stronger reform product.”
Senate Republican Leader Mitch McConnell (R-Ky.) said Congress has made mistakes during the past 14 months by rushing to pass major legislation, such as financial regulatory reform.
“Pick the issue, whether it’s the stimulus, the debt, healthcare, bailouts, you name it, the concerns that Republicans raised are being validated,” McConnell said during an afternoon floor speech.
“We’re not going to be rushed into another massive bill based on the assurances of our friends on the other side,” McConnell added.
Reid, speaking on the Senate floor, noted that two-thirds of Americans support Wall Street reform.
“A party that stands with Wall Street is a party that stands against families and against fairness,” Reid said about the GOP.
Silla Brush and Sam Youngman contributed to this report.