- The Washington Times - Monday, April 26, 2010

Republican leaders said Sunday that their ranks are unified and determined to shoot down a key test vote Monday on legislation to overhaul Wall Street regulation, posing a potentially embarrassing scenario for Democrats eager to advance a major item of President Obama’s agenda.

“It’s my expectation that we will not go forward with this partisan bill tomorrow,” Senate Minority Leader Mitch McConnell, Kentucky Republican, said on “Fox News Sunday.” “It’s not ready yet.”

Sen. Richard C. Shelby of Alabama, the top Republican on the Senate banking committee, also predicated that no Republicans will support the Democratic bill as it’s written, unless continuing weekend talks produce a compromise.

“Will we get a bill by tomorrow? I doubt it,” Mr. Shelby said on NBC’s “Meet the Press.”

Even Banking, Housing and Urban Affairs Committee Chairman Christopher J. Dodd, the bill’s main architect, was less than certain that the necessary 60 votes in the 100-member Senate could be secured to advance the bill.

“We’re not there yet, but I hope that we can get the votes tomorrow,” the Connecticut Democrat said on “Meet the Press.”

Senate Majority Leader Harry Reid — in a game of political chicken in which he is counting on Republicans to blink first — last week called for the test vote in the hope of pressuring moderate Republicans to vote “yes.” With recent accusations that financial giant Goldman Sachs committed fraud on mortgage investments still fresh in the news, the Nevada Democrat is betting that public pressure to rein in Wall Street will be too much for some Republicans to ignore.

But with only 59 members of the Democratic caucus, Mr. Reid would need at least one Republican to cross party lines — as well as total support within his ranks — for his gamble to pay off.

A Democratic defeat Monday doesn’t mean the bill is dead, but a successful Republican block would give the party improved footing to demand changes.

Republicans used a similar stall tactic this year when they unsuccessfully tried to block the Democrats’ health care overhaul.

But unlike the bitter and partisan health care debate, senators from both parties tempered their rhetoric Sunday, saying they agreed that something must be done to fix problems on Wall Street so as to avoid another financial crisis.

“It’s not ready yet,” Mr. McConnell said, but “this is not a situation where anybody I know in the Senate wants no bill to pass. But it is important to pass a good bill.”

Mr. Shelby said that Republicans and Democrats are “closer than we’ve ever been” on agreeing to legislation.

“I think we will get a bill if the Democrats want a bill and will give us some things that are substantive in nature,” he said.

If all 41 Senate Republicans vote to block the measure, Democrats likely will try to portray members of the minority party as obstructionists who aren’t serious about dealing with problems on Wall Street.

The bill, which calls for the biggest regulatory overhaul of the financial services sector since the Great Depression, includes provisions for greater consumer protections and tighter government control of the financial industries.

The measure calls for an oversight council to monitor the financial system. The agency would identify and regulate firms so large and interconnected that their collapse would put the entire financial system at risk — a scenario that prompted Congress in 2008 to approve hurriedly an unpopular $700 billion Wall Street bailout.

A key sticking point is a proposed $50 billion taxpayer-supported fund that would allow the government to dismantle failing firms that threaten the economy. Republicans say this proposal amounts to a permanent bailout authority for the government.

“It’s better not to prefund. … That creates an expectation that it will be used,” Mr. McConnell said.

One possible Republican “yes” vote is Sen. Olympia J. Snowe, a Maine moderate who has urged Mr. Reid to include provisions to strengthen the complex derivatives market.

“If we are to effectively regulate the derivatives market, we must start the Senate floor debate with the strongest proposal we can craft and defend against the inevitable attempts to weaken it,” Mrs. Snowe told the majority leader in a letter dated Friday, according to the Associated Press.

Mrs. Snowe’s request comes on the heels of a Senate Agriculture, Nutrition and Forestry Committee proposal last week to effectively bar banks from the $460 trillion derivatives market.

While Mr. Dodd’s derivatives proposal doesn’t go as far as the committee’s version, the Associated Press reported Sunday evening that an anonymous Democratic official familiar with the bill’s proceedings said that the chairman has agreed that the legislation include a provision that would force banks to spin off their derivatives operations, despite Obama administration misgivings.

Sustained anger at Wall Street among voters has emboldened Democratic leaders to press forward with plans to tighten its control of Wall Street - a key Obama campaign pledge. Results of a Gallup poll released last week show that voters favor new regulations on large banks and financial institutions by a 46 percent to 43 percent margin, and favor new regulations on Wall Street banks by 50 percent to 36 percent.

But when asked whether policymakers are up to the task, Americans are not so sure.

A Rasmussen Reports national telephone survey released Thursday shows that 64 percent of respondents say they don’t have confidence that policymakers will adequately address the nation’s Wall Street concerns. Only 32 percent say they are at least somewhat confident that policymakers know what they’re doing — a figure that includes 9 percent who are very confident.

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