Senate Republicans have agreed by consent to let the Democrats’ partisan finance bill come to the floor for debate after winning important concessions on some more contentious areas of the bill.
Democrats must still reach a 60-vote threshold to end debate before any final vote on the bill could be taken.
“Chairman Dodd has assured me that he will address a number of concerns I have expressed with respect to ending bailouts,” said Sen. Richard Shelby (R-Ala.), top Republican on the Senate Banking, Housing and Urban Affairs Committee. “I take him at his word.”
Concessions included killing the $50 billion slush fund Democrats desired for the government takeover of firms deemed “too big to fail.” Language in the partisan bill authored by Dodd does not require failing firms to wind down once seized by the government. The language in Dodd’s bill instead uses loophole terminology of a “strong presumption” that the slush fund would be used for liquidation purposes.
Republicans were also assured that creditors of the distressed companies would not receive recoupment in excess of payments that creditors would receive under the normal course of a bankruptcy proceeding.
AIG creditor Goldman Sachs got a backdoor bailout of 100 cents on the dollar courtesy of the American taxpayer. The normal recoupment rate in a bankruptcy proceeding is less than 50 cents on the dollar.
Shelby said Democrats were unwilling to make any reasonable changes to their proposed so-called consumer protection bureau.
“This bill still contains a sprawling new consumer protection bureau that will find and force its way into facets of our economy that had nothing to do with the housing crisis,” Shelby said. “This massive new bureaucracy would have unchecked authority to regulate whatever it wants, whenever it wants, however it wants. I am aware of no other arm of the federal government this powerful, yet so unaccountable.”
Dodd’s bill also funds the bureau through the Federal Reserve so there is very limited Congressional oversight and accountability.
No definitive agreements have been reached on the complex issue of derivatives as Democrats can’t come to a consensus within their own caucus.
“[Derivatives] provisions, which Democrats developed on their own behind closed doors, were only very recently inserted into the bill,” Shelby said. “In fact, I was not provided the opportunity to share my views on a single aspect of the derivatives provision.”
The Dodd bill failed for the third time to reach cloture earlier in the day by a vote of 56-42 (Sen. Harry Reid voted no for procedural reasons; Sen. Ben Nelson joined all Republicans in opposing the motion and Sens. Bob Bennett and Robert Byrd were absent).
The repeated failure of the motion to proceed to debate on the bill allowed Republicans to win the concessions on the bill prior to the floor debate.
Democrats threatened at the last minute to keep the Senate in session all night and perhaps “indefinitely” offering that threat as a bizarre reason Republicans agreed to accept concessions and move to debate.
“The time afforded by my Republican colleagues and Sen. Ben Nelson was instrumental in gaining assurances from the chairman that changes will be made to end taxpayer bailouts and the dangerous notion that certain financial institutions are too big to fail,” said Senate Republican Leader Mitch McConnell (R-Ky.). “Unfortunately, Sen. Shelby believes that continued talks on a number of provisions affecting Main Street will not bring the negotiators any closer to an agreement.”
“I remain deeply troubled by a number of provisions in this bill and will work aggressively in the days ahead to ensure that the majority does not use our mutual interest in regulating Wall Street to extend the federal government’s unwanted hand into Main Street,” McConnell added.
As is the case with anything Democrats do, this is about expanding government power over people.
“While I firmly believe we must end the casino-like atmosphere on Wall Street, I also believe we must protect Main Street’s ability to create jobs and grow the economy,” Shelby said. “In my judgment, the provisions as currently drafted would have far-reaching and devastating effects on these businesses and our economy, increasing the cost of nearly every product we use and negatively impacting job growth.”
Republicans will take up the fight in amendments with the 60-vote threshold still needed to end debate as the Dodd bill moves to the floor Thursday afternoon.