FEATURED:

Divided Dems fight over Wall St. reform

Divisions among Democrats emerged Tuesday on the details of Wall Street reform legislation.

Sen. Bernie SandersBernard (Bernie) SandersDems ponder gender politics of 2020 nominee 2020 Dem contenders travel to key primary states After Florida school shooting, vows for change but no clear path forward MORE (I-Vt.) said White House opposition to his amendment allowing for an audit of the Federal Reserve was inconsistent with President

ADVERTISEMENT
Barack ObamaBarack Hussein ObamaOvernight Energy: Dems ask Pruitt to justify first-class travel | Obama EPA chief says reg rollback won't stand | Ex-adviser expects Trump to eventually rejoin Paris accord Overnight Regulation: Trump to take steps to ban bump stocks | Trump eases rules on insurance sold outside of ObamaCare | FCC to officially rescind net neutrality Thursday | Obama EPA chief: Reg rollback won't stand Ex-US ambassador: Mueller is the one who is tough on Russia MORE's campaign promises on transparency, while Democrats also squared off on language putting restrictions on the trading of derivatives.

The policy differences have generally divided populist Democrats from those with ties to the financial markets and those more closely allied with the Obama administration.

The intra-party disagreements are a departure from last week, when the entire Democratic conference — minus conservative Sen. Ben Nelson (D-Neb.) —  joined forces to compel Republicans to allow debate on the measure.

The results of the looming debates on various amendments to the underlying bill could affect the profits of the multi-trillion-dollar financial services industry as well as the enthusiasm of Democratic base voters.

The biggest quandary Democrats face is how to regulate the $600-trillion-plus derivatives market.
Senate Agriculture Committee Chairwoman Blanche Lincoln (D-Ark.) has put forth a proposal that would require the dealing of derivatives to be reported publicly and, more controversially, would require big banks to spin off their derivatives-trading business.

“There’s some division in the caucus over that,” said a liberal senator who attended the lunch and supports Lincoln’s proposal. “But some of the New York people and others want banks to be able to continue selling derivatives.”

The trading of derivatives is big business in New York and other financial centers. Section 106 of Lincoln’s proposal has caused reservations among Sen. Charles SchumerCharles (Chuck) Ellis SchumerDemocrats now attack internet rules they once embraced Schumer: Trump budget would ‘cripple’ gun background checks Schumer: Senate Republicans' silence 'deafening' on guns, Russia MORE (D-N.Y.) and other influential Democrats.

“As for 106, I’m looking at it,” said Schumer, a member of Senate leadership and the Banking Committee, adding that he supported the transparency requirements put forth by Lincoln.

“The other parts, I fully support, which are the heart of her amendment,” he said.

Sen. Mark WarnerMark Robert WarnerLawmakers worry about rise of fake video technology Mueller indictment reveals sophisticated Russian manipulation effort GOP cautious, Dems strident in reaction to new indictments MORE (Va.), another Banking panel Democrat, said he has “concerns” over the provision affecting derivatives.

He said he wants to crack down on the reckless trading of derivatives which critics have compared to gambling but he also wants to be careful not to force the domestic derivatives market offshore.

The internal dispute has held up an amendment that would attach Lincoln’s reform to the broader Wall Street bill. The substitute amendment offered by Lincoln and Senate Banking Committee Chairman Chris Dodd (D-Conn.) was supposed to be the first one considered but as of press time, it was still in limbo.
 
The Sanders amendment

An unlikely coalition of liberal Democrats and Republicans have voiced support for Sanders’s proposal, which calls for the Government Accountability Office to audit the Federal Reserve and would force the Fed to disclose online all the recipients of trillions of dollars in taxpayer loans through the agency’s secret “discount window” program.

Sanders’ bill has 33 backers, including Sens. Barbara BoxerBarbara Levy BoxerKamala Harris endorses Gavin Newsom for California governor Dems face hard choice for State of the Union response Billionaire Steyer to push for Dem House push MORE (D-Calif.), Ben CardinBenjamin (Ben) Louis CardinWashington puts Ethiopia's human rights abusers on notice Overnight Defense: Mattis vows Dreamers in military won't be deported | Pentagon unsure if military parade will be in Washington | Dem bill would block funds for parade Dems introduce bills to block funds for Trump's proposed parade MORE (D-Md.), John McCainJohn Sidney McCainLawmakers worry about rise of fake video technology Democrats put Dreamers and their party in danger by playing hardball Trump set a good defense budget, but here is how to make it better MORE (R-Ariz.), John ThuneJohn Randolph ThuneFlake to try to force vote on DACA stopgap plan Congress punts fight over Dreamers to March The 14 GOP senators who voted against Trump’s immigration framework MORE (R-S.D.) and Tom CoburnThomas (Tom) Allen CoburnPaul Ryan should realize that federal earmarks are the currency of cronyism Republicans in Congress shouldn't try to bring back earmarks Republicans should know reviving earmarks is a political nightmare MORE (R-Okla.).

Asked if he supports the Sanders measure, Reid indicated he would allow a vote on it, but said he needed to review the amendment’s details.

The administration has pushed back hard against the proposal, which could become a public relations nightmare for the White House — depending on how many billions of dollars were made available to Wall Street banks during the financial crisis.

Federal Reserve Chairman Ben Bernanke traveled to the Senate side of the Capitol on Tuesday to lobby against the Sanders amendment.

Sanders told Democratic colleagues at Tuesday’s weekly lunch that a broad group of Republicans would support his proposal, giving him and his liberal allies a chance to pass it over the administration’s objections.

Sanders acknowledged that the administration “does not like” his proposal, but he has refused to back down.

Asked if he thinks the White House’s opposition to his amendment runs contrary to the president’s promises on transparency, Sanders replied, “Yes.”
Rep. Ron Paul (R-Texas), the author of the House companion to Sanders’s bill, successfully attached his measure to the regulatory reform bill that passed the House late last year.

Some Democrats worry the revelations about the Fed’s lending practices could give Republicans political ammunition, and they teased Sanders about working with the GOP.

“Some people were joshing him. They said, ‘You’ve been in the Senate too long and are going soft by working with the Republicans,’” said a senator who requested anonymity.

Sen. Claire McCaskillClaire Conner McCaskillMcCaskill welcomes ninth grandson in a row Dem group launches M ad buy to boost vulnerable senators Senate Dems block crackdown on sanctuary cities MORE (D-Mo.) warned that Republicans could exploit an audit of the Fed.

“I’m really worried the amendment is going to politicize the Fed,” said McCaskill, who noted that setting monetary policy “has not been a political activity.”

Schumer said the differences within his conference are small compared to its differences with the GOP.

Schumer said Republicans would oppose Lincoln’s proposal to increase transparency rules and establish exchanges for trading derivatives.

Democratic leaders have taken a light-handed approach to the internal debates, according to one lawmaker who attended the Tuesday meeting.

“The message from leadership was ‘Let’s all stay on the theme that we’re trying to make a good bill better,’” said the legislator. “Other than that, it’s a free-for-all in terms of the amendment process.”

Democrats say the divisions are not only in their caucus and predicted that Republicans would also be split by some of the amendments.

Democratic senators said they expect other amendments to divide their conference as the debate grinds on.

Sens. Jeff MerkleyJeffrey (Jeff) Alan MerkleyGrassley, Dems step up battle over judicial nominees 2020 Dem contenders travel to key primary states Mulvaney remarks on Trump budget plan spark confusion MORE (D-Ore.) and Carl LevinCarl Milton LevinSen. Gillibrand, eyeing 2020 bid, rankles some Democrats The Hill's 12:30 Report Congress needs bipartisanship to fully investigate Russian influence MORE (D-Mich.) plan to offer an amendment that would bar commercial banks from engaging in proprietary trading.

The pending legislation would allow federal regulators to make allowances for banks to bet their own capital on trades.

The Merkley-Levin proposal would garner the support of many liberals but would also run afoul of New York lawmakers and others with constituents in the financial services industry.

Reid said Tuesday that he wants votes on a lot of amendments but said a vote on final passage will happen next week.

Bob Cusack contributed to this article.