Lawmakers turn debate over regulatory reform into campaign issue

They have recast the issue as “Wall Street reform” and promise a “barrage” of advertisements and news stories in the districts of vulnerable Republicans who oppose the bill, depicting them as the obedient servants of Wall Street.

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Particularly vulnerable in the eyes of Democratic strategists are the 91 Republicans who voted in favor of the $700 billion Wall Street bailout, commonly referred to as the Troubled Asset Relief Program (TARP).

House Minority Leader John BoehnerJohn Andrew BoehnerIs Congress retrievable? Boehner reveals portrait done by George W. Bush Meadows to be replaced by Biggs as Freedom Caucus leader MORE’s (R-Ohio) emotional call to vote for the bailout will likely play a prominent role in any advertisements and Internet campaigns.

House Financial Services Chairman Barney Frank (D-Mass.) blasted out a fundraising appeal Tuesday through the Democratic Congressional Campaign Committee (DCCC) saying Republicans oppose the bill in hopes of continuing to reap contributions from Wall Street banks.

“House Republicans now oppose financial regulation because they have learned nothing from the current economic crisis,” Frank added.

But Republican aides said they were confident that all but a few Republicans will oppose the bill. They said Democrats are the ones who will pay at the polls for supporting the regulatory plan. They’ve dubbed it “TARP II” and claim it creates “slush funds” that will foster a “permanent bailout environment.”

“We need to get the federal government out of the bailout business,” said BoehnerJohn Andrew BoehnerIs Congress retrievable? Boehner reveals portrait done by George W. Bush Meadows to be replaced by Biggs as Freedom Caucus leader MORE spokesman Michael Steel, “but Chairman Franks’ proposal will keep the bailouts going — and it will ship American jobs overseas when we already have double-digit unemployment.”

The wide-ranging regulatory package, expected to be on the floor starting Wednesday, would regulate risks across the financial system, impose new curbs on the multitrillion-dollar derivatives market and give the government tools to dissolve failing financial firms. House Majority Leader Steny Hoyer (D-Md.) said he expects a vote no later than Friday.

House members are to hold a closed-door caucus meeting Wednesday afternoon on regulatory reform. On Monday, White House staffers held a session with Democratic press secretaries and distributed polling that said the concepts behind the legislation are popular with voters.

Democrats also re-circulated a Lake Research Partners poll from October showing that the regulatory reform proposal is popular even in conservative districts where Democratic members are considered highly vulnerable.