Unified Senate Republicans picked up Democratic support Monday and blocked temporarily President Obama’s push on the most sweeping financial overhaul since the Great Depression, buying time to try to craft a bipartisan bill aimed at making Wall Street more accountable for its actions.
But Democrats characterized the failure to get the 60 votes needed to begin debate as minor and vowed to press forward with the measure on behalf of Main Street voters.
“My [no] vote tonight was to send a signal that this legislation should be written to achieve broad-based, bipartisan support,” said Sen. Charles E. Grassley, Iowa Republican.
Republicans suggested that Senate Majority Leader Harry Reid, Nevada Democrat, was playing election-year politics with the measure by forcing the vote while negotiations are ongoing, saying both parties are eager to reel in excesses in the financial markets to prevent more economic catastrophes.
“It wasn’t necessary to have the vote today because the discussions are going along in good faith, and there are some concerns about the legislation, and we want to make sure they’re addressed,” said moderate Republican Sen. Olympia J. Snowe of Maine.
Mr. Reid mocked Republicans, saying, “The only thing Republicans stand for is standing together.”
The Nevada Democrat said late Monday he expects to hold more votes this week in hopes of moving the bill forward.
“We remain open to working with our Republican colleagues, but we will not tolerate efforts to slow-walk this process or water down this reform,” he said.
Nebraska Democrat Ben Nelson joined Republicans in the 57-41 procedural vote. Mr. Reid switched his “yes” vote to “no” in a procedural move, which allows him to reintroduce the bill later. Two Republicans — Sens. Christopher S. Bond of Missouri and Robert F. Bennett of Utah — did not cast votes.
The bill calls for a new oversight council, working separately from the Securities and Exchange Commission, 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 firms whose fiscal woes are dangerous to the nation’s economic well-being. Republicans say this proposal amounts to a permanent bailout authority for the government, which undermines free-market principles unless coupled with clear-cut rules for regulators to act upon.
Aides to Sen. Richard C. Shelby, the top Republican on the Senate Banking, Housing and Urban Affairs Committee, who has been negotiating with committee Chairman Christopher J. Dodd, Connecticut Democrat, say Republicans want to tighten language that they think would give the Federal Reserve and the Federal Deposit Insurance Corp. too much flexibility to assist large banks and their creditors. Mr. Shelby also wants to restrict the rule-writing powers that Mr. Dodd would give a consumer financial protection bureau within the Federal Reserve.
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.
The president said he was “deeply disappointed” in the Republicans’ action.
“Some of these senators may believe that this obstruction is a good political strategy, and others may see delay as an opportunity to take this debate behind closed doors,” Mr. Obama said in a statement released by the White House. “But the American people can’t afford that.”
Monday’s action doesn’t mean the bill is dead, but the Republicans’ successful block gives the party more footing to demand changes.
Democrats were unfazed and said they hope the Republicans’ action will backfire, as voters may view the minority party as obstructionists who aren’t serious about fixing problems within the financial-services sector.
“We’re going to keep on coming back to it until we get it done,” said Sen. Barbara Boxer, California Democrat. “We can’t afford another taxpayer bailout [of Wall Street] when the financial companies do the same thing all over again.”
Regulation of the complex derivatives markets is another issue that negotiations must hammer out. The Senate’s agriculture committee proposed last week to effectively bar banks from the murky, $460 trillion derivatives market.
The Obama administration, which initially had misgivings about the committee’s position on derivatives, on Monday announced it would not oppose the provision.
Mr. Reid last week called the snap vote in the hope of pressuring Republicans to support the measure.
The bill, which calls for the biggest regulatory overhaul of the financial-services sector since the 1930s, includes provisions for greater consumer protections and tighter government control of the financial industries.
• This article is based in part on wire service reports.