WASHINGTON — Republicans abandoned their blockade against legislation to clamp tough new controls on Wall Street on Wednesday, clearing a road to likely passage for the most sweeping rewrite of financial rules since the Great Depression.
Democrats and Republicans agree the Senate will ultimately pass landmark changes aimed at preventing a recurrence of the crisis that knocked the nation’s financial system to its knees in 2008, but the battle now begins over crucial details. The House has already passed its version.
Democrats said the Republicans had given in after three days of votes to block debate, realizing they were on the losing end of a battle for public opinion. GOP lawmakers said they would now switch to trying to change the bill on the Senate floor.
Sen. Sheldon Whitehouse, D-R.I., said, “There’s been immense pressure bottled up inside the Republican caucus through these last three votes. A lot of their members have been very deeply unhappy with the direction their leadership has been taking them. Better heads prevailed.”
Democrats had threatened to hold the Senate in session all night making their case that the Republicans were stalling legislation of importance to virtually every American. The Democrats also have been laying plans to make the legislation a major issue in midterm elections this summer and fall. The Republican retreat came one day after senior executives of Wall Street giant Goldman Sachs were denounced by lawmakers from both parties at a marathon Senate hearing.
In the debate that now can proceed, Democrats and Republicans will attempt to change the underlying bill. Republicans will take particular aim at the magnitude of consumer-protection provisions that President Barack Obama says are vital. Liberal Democrats are expected to seek to limit the size of banks.
The GOP decision to relent came after Sen. Rich ard Shelby, the top Republican on the Senate Banking Committee, told his colleagues that he could win no further concessions from Banking Committee chairman Christopher Dodd in private talks. He said Dodd did agree to adjust some provisions that Republicans had complained would permit further bank bailouts.
But there were already signs that some Republicans were growing weary of continuing to block the bill after Obama and other Democrats accused them of siding with Wall Street, an institution that rivals Congress in its unpopularity.
“The point of all of this was to make sure that as long as those discussions could bear results that we would support that effort,” Republican Sen. Olympia Snowe of Maine said of her party’s objections. “Now we proceed to the floor for amendments on the remainder of the bill.”
How the debate unfolds will determine whether the legislation achieves significant bipartisan support. Democrats still need 60 votes to get past procedural obstacles, a number they can’t reach without at least one Republican on their side.
The bill would establish a nine-member Financial Services Oversight Council to monitor markets for threats. The Federal Reserve would begin policing large bank-holding companies and interconnected nonbank institutions whose collapse might pose a threat to the economy.
Most investment derivatives — such as the hundreds of billions of dollars in complex instruments blamed for accelerating the crisis two years ago — would have to be traded on regulated exchanges.
