Brian Beutler at Talking Points Memo:
With the Wall Street reform legislation agreed to by House and Senate negotiators now in serious doubt in the Senate, what happens if the final bill can’t muster the votes? At his weekly press availability this morning, House Majority Leader Steny Hoyer hinted that they may have to make some changes.
“We’re trying to work with the Senate to ensure that we both take up a version that does in fact have 60 votes,” Hoyer said.
But the conference report, passed late last week, can not be amended on the House or Senate floors. It’s an up-or-down, yes-or-no proposition. If they need a new ‘version’ that has 60 votes to overcome a filibuster, they’d have to reconvene the conference committee, strip the language that offends Sen. Scott Brown (R-MA) and Sen. Susan Collins (R-ME) and try again.
In the wake of a historic economic collapse caused largely by a financial industry allowed to run rampant, Sen. Russ Feingold (D–Wisc.) has decided to vote in favor of doing nothing at all to address this:
As I have indicated for some time now, my test for the financial regulatory reform bill is whether it will prevent another crisis. The conference committee’s proposal fails that test and for that reason I will not vote to advance it. During debate on the bill, I supported several efforts to break up ‘too big to fail’ Wall Street banks and restore the proven safeguards established after the Great Depression separating Main Street banks from big Wall Street firms, among other issues. Unfortunately, these crucial reforms were rejected. While there are some positive provisions in the final measure, the lack of strong reforms is clear confirmation that Wall Street lobbyists and their allies in Washington continue to wield significant influence on the process.
Can I vent for a minute? I know Feingold is proud of his inconoclastic reputation. I know this bill doesn’t do as much as he (or I) would like. I know the financial industry, as he says, continues to have way too much clout on Capitol Hill.
But seriously: WTF? This is the final report of a conference committee. There’s no more negotiation. It’s an up-or-down vote and there isn’t going to be a second chance at this. You either vote for this bill, which has plenty of good provisions even if doesn’t break up all the big banks, or else you vote for the status quo. That’s it. That’s the choice. It’s not a game. It’s not a time for Feingold to worry about his reputation for independence. It’s a time to make a decision between actively supporting something good and actively supporting something bad. And Feingold has decided to actively support something bad.
Scott Brown, the junior Senator from Mass:
Dear Chairman Dodd and Chairman Frank,
I am writing you to express my strong opposition to the $19 billion bank tax that was included in the financial reform bill during the conference committee. This tax was not in the Senate version of the bill, which I supported. If the final version of this bill contains these higher taxes, I will not support it.
It is especially troubling that this provision was inserted in the conference report in the dead of night without hearings or economic analysis. While some will try to argue this isn’t a tax, this new provision takes real money away from the economy, making it unavailable for lending on Main Street, and gives it to Washington. That sounds like a tax to me.
I have always strongly opposed a bank tax because, as the non-partisan CBO has said, costs would be passed onto the millions of American consumers and small businesses who rely on major U.S. financial institutions for their checking, ATM, loans or other services. This tax will be paid by consumers who will have to pay higher fees and the small businesses that won’t get the funding they need to invest and create jobs.
Imposing this new tax is the wrong option. Our economy is still struggling. It is wrong to impose higher taxes and ignore the impact it will have on our economy without considering other ways we might offset the costs of the measure. I am asking that the conference committee find a way to offset the cost of the bill by cutting unnecessary federal spending. There are hundreds of billions in unspent federal funds sitting around, some authorized years ago for long-dead initiatives. Congress needs to start to looking there first, and I stand ready to help.
Senator Scott P. Brown
John Carney at CNBC:
Democrats on Tuesday planned to strip out a controversial tax from their landmark financial reform bill in order to win the swing votes needed to pass it through Congress.
With crucial Republican moderates threatening to withdraw their support, Democrats were weighing alternative ways to fund the most sweeping rewrite of the Wall Street rulebook since the 1930s.
Though a supposedly final version of the bill had been hammered out last week, Democrats in charge of the process called a fresh negotiating session, which got under way shortly after 5 p.m. EDT Tuesday.
Democratic lawmakers and aides said they planned to remove a $17.9 billion tax on large financial institutions. Instead, they would cover most of the bill’s costs by shutting down a $700 billion bank-bailout program.
“I haven’t talked to everybody, but I gather from a number of people they like this option,” said Democratic Senator Christopher Dodd, one of the lawmakers in charge of the bill.
The bill had been expected to pass both chambers of Congress this week in time for President Obama to sign it into law by July 4. But supporters have been forced to scramble for votes in the Senate, putting that goal in jeopardy.
Analysts said while that timetable may slip, the bill was still likely to become law.
“We believe that this legislation will pass, timing and the bank tax remain the final question marks,” wrote FBR Capital Markets analyst Edward Mills in a research note.
Jay Newton-Small at Time:
Senate Banking Committee Chairman Chris Dodd stood an hour ago in the Senator’s Retiring Room off of the Senate floor in an intense conversation with Massachusetts Senator Scott Brown – one of surely many they will have today. Dodd is trying to get Brown, one of four Republicans who voted for the Senate version of financial regulatory reform, to pledge his support for final passage. House and Senate negotiators last week worked out a deal to combine the two measures only to find that Brown couldn’t support $18+ billion in new bank fees. To complicate matters, Democrats are now down a vote due to the untimely death of Senator Robert Byrd, a West Virginia Democrat.
Dodd, a Connecticut Democrat, and House Financial Service Chairman Barney Frank are planning on taking the unusual step of reopening the conference committee this afternoon. Lucky for them it wasn’t formally closed or reopening it would’ve taken votes from both chambers of Congress. They have been negotiating with the four Republicans – Brown, Maine Senators Olympia Snowe Susan Collins and Iowa’s Chuck Grassley — on new offsets for the $18+ billion. Dodd says that 90% of the $18+ billion would now be paid for by the immediate end of TARP, the unpopular bank bailout fund due to expire October 3. The additional offset would come from raising fees the banks pay to the Federal Deposit Insurance Corporation, exempting all small banks under $10 billion capitalization (Dodd says he’s spoke to Sheila Bair on this and she’s fine with it). Some Republicans still have reservations that such a move, though, wouldn’t prompt the banks to pass the cost on to consumers. “Repealing TARP definitely appeals to me,” says Snowe, who met with Dodd in her office last night and again this morning. “At this point other issues are not related to the TARP part, we’re still looking at how you replace those fees. So things are still in motion here, there are a lot of conservations developing.”
Brown, emerging from his meeting with Dodd, says he’s waiting to see the final product and hasn’t made any decisions yet. Brown sent Dodd and Frank a letter this morning announcing his opposition to the $18+ billion in fees, prompting today’s dramatics. Collins told reporters she was pleased with her meetings with Dodd but that she also had made no final decision. Grassley was nowhere to be found. “I gather there were a number of people who were uneasy with the earlier pay-for who like this alternative and so the present plan is to probably reconvene the conference this afternoon,” Dodd said, heading into a meeting in Senate Majority Leader Harry Reid’s offices. If all four Republicans sign on, Dems should have enough votes to pass the Senate as they race to finish the legislation by the end of the week.
Annie Lowrey at The Washington Independent:
Rather than charging the hedge funds and big banks considered most responsible for the financial crisis a reasonable fee for implementation, the conference committee will settle for ending a government stability program and spreading the pain around to all federally insured banks — including small community-focused banks — to satisfy the demands of one Republican. So it goes in Washington.
It would be a fiasco of tragic proportions if the banks managed to remove these taxes from the final bill, essentially absolving themselves from cleaning up after their own mess. The arguments against the taxes are weak indeed: either you simply oppose all taxes on principle (which seems to be the Scott Brown stance, and which is fiscally disastrous), or else you’re forced into John Carney’s corner.
Carney is worried that we don’t know exactly where the tax will be applied — but that’s a feature, not a bug. Setting up the tax in great deal ex ante is essentially just asking banks to spend millions of dollars on tax consultants who can help them skirt the new levies. And as the risks in the system evolve and change, so to should the way that they’re taxed. It’s right and proper that the newly created Council for Financial Stability will be charged with taxing systemic risk, rather than having a bunch of politicians try to do so at the beginning and then watch as the banks and other financial institutions nimbly sidestep the new taxes.
An increase in the FDIC premium would be a gift on a platter to banks like Goldman Sachs and Morgan Stanley which don’t have insured deposits — not to mention non-bank players like Citadel which are systemically very important. I’m unclear on what exactly this Republican “procedural hurdle” is — I thought that after reconciliation, you just needed a simple majority to pass a bill. But I’m getting very annoyed about it.
UPDATE: Russell Berman at The Hill
UPDATE #2: Eric Zimmermann at The Hill
Noam Scheiber at TNR