WASHINGTON — Senate Republicans united Monday to block debate on legislation that would make the most far-reaching changes in financial industry regulation since the Great Depression — slowing but probably not stopping a bill that has been propelled by angry voters who want to crack down on Wall Street.
The 57-41 vote marked the first Senate showdown over the issue. No Republicans voted for the motion to begin debate on the bill; 60 votes were needed to end GOP delaying tactics and move the issue to the Senate floor. Sen. Ben Nelson of Nebraska, a Democrat, joined in the opposition.
But the impasse may be short-lived because behind- the-scenes negotiations among Democrats and Republicans are aiming to craft a compromise that could win back Nelson and some GOP converts — perhaps by the end of the week.
Monday’s vote was largely political theater. Democrats think the GOP will end up looking like obstructionist friends of Wall Street. Republicans saw a chance to show themselves as preventing hasty action and holding out for better protection of taxpayers against the excesses of financiers.
“A party that stands with Wall Street is a party that stands against families and fairness,” said Senate Majority Leader Harry Reid, D-Nev., who switched his vote to ‘no’ at the last minute in a parliamentary maneuver to enable Democrats to bring the issue up again — perhaps as early as today — in an effort to keep pressure on Republicans.
Senate Republican leader Mitch McConnell of Kentucky said the GOP was opposing the motion to begin debate because it thought the Democrats’ plan did not do enough to ensure that the government would not again foot the bill for bailing out institutions deemed “too big to fail.” A vote to block the bill from coming to the floor is “a vote for bipartisanship, for working out an ironclad solution to the problem of too big to fail,” McConnell said.
After the vote, President Barack Obama issued a statement saying he was “deeply disappointed” that Republicans voted to block the bill.
“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, where financial- industry lobbyists can water down reform or kill it altogether,” Obama said. “But the American people can’t afford that.”
The push for overhauling the financial regulatory system — like the health care battle before it — represents a landmark domestic policy initiative by the president and his Democratic allies in Congress. And it may be their last chance for a major victory before this fall’s contentious midterm elections.
The financial regulation bill, a version of which has been approved by the House, would place new restrictions on financial institutions and on transactions that have been largely unregulated, establish a new consumer protection agency within the Federal Reserve, and give the government new power to oversee the dissolution of large failing institutions without taxpayer bailouts.
Republicans, wary of defending an unpopular industry, say they are trying to improve the legislation rather than stop it.
Their principal aims are to close loopholes they believe will allow government bailouts of failing firms, add restrictions on the mortgage giants Fannie Mae and Freddie Mac, limit the power of the consumer agency and ease proposed regulations on derivatives — complex financial instruments that contributed to the 2008 financial collapse.
Despite the prospect of a bipartisan agreement, Reid pushed for Monday’s showdown vote to step up pressure on the GOP and make it easier to portray them in a politically unfavorable light. Jim Manley, Reid’s spokesman, said he also took a lesson from the bruising health care debate that a GOP clamor for bipartisan agreement may end up being just a delaying tactic.
But with the first showdown behind them, Democrats are divided over just how hard a bargain to drive in negotiations with the GOP.
Senate Banking Committee chairman Christopher Dodd, D-Conn., and other committee Democrats who have been working for months to write a compromise say they are eager to actually enact a bill, not just score political points along the way.
“I don’t think it serves us well to be screaming at each other about who cares about this issue the most,” Dodd said during Monday’s debate.
