Divided Dems fight over Wall St. reform

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

Sen. Bernie SandersBernie SandersOutrage erupts over Breonna Taylor grand jury ruling Dimon: Wealth tax 'almost impossible to do' Grand jury charges no officers in Breonna Taylor death MORE (I-Vt.) said White House opposition to his amendment allowing for an audit of the Federal Reserve was inconsistent with President

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Barack ObamaBarack Hussein ObamaThe Memo: Trump's strengths complicate election picture Obama shares phone number to find out how Americans are planning to vote Democrats' troubling adventure in a 'Wonderland' without 'rule of law' 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 SchumerChuck SchumerCruz blocks amended resolution honoring Ginsburg over language about her dying wish Senate Democrats introduce legislation to probe politicization of pandemic response Schumer interrupted during live briefing by heckler: 'Stop lying to the people' 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 WarnerDemocrats call for declassifying election threats after briefing by Trump officials It's time to upgrade benefits Intelligence chief says Congress will get some in-person election security briefings 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 BoxerThe Hill's Morning Report - Presented by Facebook - Biden, Harris launch Trump offensive in first joint appearance Bottom line Polls show big bounce to Biden ahead of Super Tuesday MORE (D-Calif.), Ben CardinBenjamin (Ben) Louis CardinCongress must finish work on popular conservation bill before time runs out PPP application window closes after coronavirus talks deadlock  Congress eyes tighter restrictions on next round of small business help MORE (D-Md.), John McCainJohn Sidney McCainThe Memo: Trump's strengths complicate election picture Mark Kelly: Arizona Senate race winner should be sworn in 'promptly' Cindy McCain: Trump allegedly calling war dead 'losers' was 'pretty much' last straw before Biden endorsement MORE (R-Ariz.), John ThuneJohn Randolph ThuneOvernight Defense: Stopgap spending measure awaits Senate vote | Trump nominates former Nunes aide for intelligence community watchdog | Trump extends ban on racial discrimination training to contractors, military Remote work poses state tax challenges Senate GOP sees early Supreme Court vote as political booster shot MORE (R-S.D.) and Tom CoburnThomas (Tom) Allen CoburnCOVID response shows a way forward on private gun sale checks Inspector general independence must be a bipartisan priority in 2020 Congress must protect federal watchdogs 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 McCaskillMomentum growing among Republicans for Supreme Court vote before Election Day Democratic-linked group runs ads in Kansas GOP Senate primary Trump mocked for low attendance at rally 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 MerkleyThe Hill's Morning Report - Sponsored by The Air Line Pilots Association - Trump, Biden renew push for Latino support Sunday shows - Trump team defends coronavirus response Oregon senator says Trump's blame on 'forest management' for wildfires is 'just a big and devastating lie' MORE (D-Ore.) and Carl LevinCarl Milton LevinMichigan to pay 0M to victims of Flint water crisis Unintended consequences of killing the filibuster Inspector general independence must be a bipartisan priority in 2020 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.