Reid: GOP is 'making love to Wall Street'

Senate Majority Leader Harry Reid (D-Nev.) accused Republicans Wednesday of “making love to Wall Street.”

Reid charged that Republicans are stalling action on a Wall Street reform bill because “they are having difficulty determining how they’re going to continue making love to Wall Street” by resisting banking regulation.

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The sweeping Wall Street reform bill had stalled on the Senate floor because of a partisan disagreement over how to handle amendments, though shortly after Reid’s comments, Senate Banking Committee Chairman Chris Dodd (D-Conn.) announced a breakthrough in negotiations.

The deal Dodd struck with Sen. Richard Shelby (R-Ala.), the ranking member on his panel, is focused on how to deal with “too big to fail” institutions. It’s not clear whether the deal to provide for the orderly liquidation of troubled banks would be enough to solve the partisan dispute over other amendments.

“They won’t let us deal with any amendments,” Reid complained before Dodd’s announcement. He noted that Republicans had objected to amendments offered by Sen. Olympia Snowe (R-Maine) that Democrats would accept without opposition.

Republicans relented later in the day by allowing roll-call votes on two amendments, which the Senate adopted.

The GOP also allowed the chamber to adopt the Snowe amendments by voice-vote.

Republicans say they are trying to fix provisions they contend would damage the national economy. They argue proposed regulations of the derivatives market could force it overseas. They also contend that a proposed consumer financial protection bureau could stifle businesses and small banks.

Reid, however, accused the GOP of obstruction.

“It’s obvious they don’t want to put any decent restrictions on what Wall Street has done or are doing,” he said.

Under the deal with Shelby, Dodd agreed to amend a proposal to set up a $50 billion fund to pay for the dissolution of troubled institutions.

Big banks would no longer have to pay into a rescue fund to liquidate large, troubled financial institutions. Instead, creditors would have to pay liquidation costs that exceed the value of the assets sold off during bankruptcy proceedings.

“Creditors will be required to pay back the government any amounts they received above what they would have gotten in liquidation,” Dodd announced in a statement. “Those who directly benefited from the orderly liquidation will be the first to pay back the government at a premium rate.”

Dodd said the agreement would empower the Federal Deposit Insurance Corporation to unwind troubled banks that pose a risk to the markets.

 

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“Regulators will still have the authority to break up a company if it poses a grave threat to the financial stability of the United States.  A very important point,” Dodd said.

Dodd and Shelby offered their agreement in an amendment the Senate adopted by a vote of 93-5 Wednesday afternoon.

The chamber also voted 96-1 for an amendment offered by Sen. Barbara Boxer (D-Calif.) that would place a strict prohibition on using taxpayer funds to rescue financial companies.  

At his press conference, Reid reiterated that he supports adopting amendments to the reform bill by simple majority vote.

The Boxer and Dodd-Shelby amendments needed only a simple majority to pass, according to a Democratic aide.

Reid said he would also review an amendment offered by Sen. Bernie Sanders (I-Vt.) that would require the Federal Reserve to submit to a Government Accountability Office audit, a proposal the Obama administration staunchly opposes.

Reid touted his long record of supporting greater scrutiny of the Fed, noting he joined Sen. Byron Dorgan (D-N.D.) to call for a study of perks received by the Fed’s board of directors.

“I’ve been working on the Fed for many, many years,” he said.