Why The GOP Suddenly Let Up On Financial Reform

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Within 48 hours, the Republican line on financial regulatory reform went from “filibuster” to “we’re very close to a deal.” Why the shift? Republicans and Democrats will offer up spin all day, chalking up the progress to their own doggedness, but in the end it comes down to a simple reality. Key Republicans, sincere about passing new rules for Wall Street, but intimidated by the notion of blocking financial regulatory reform, let it be known to their leadership that, at some point, they would side with Democrats to break a filibuster. Maybe not on round one, or even round two. But eventually.

“Folks on our side of the aisle want a bill,” Sen. Bob Corker (R-TN) told TPMDC and a few other reporters Monday night. “I know that. I just [had a] discussion with some of our leadership on the floor. You know, we want a bill.”Sen. Olympia Snowe (R-ME) made it equally clear: if top-level negotiations broke down, she and other members would find a solution. “I think it’s important to continue between the two principals on the committee, because that’s where it’s likely to happen,” Snowe told reporters yesterday afternoon. “But if not then we’ll take things as they come. We’ll take the next step.”

This afternoon, entering a Republican caucus meeting, the Republican Deputy Whip John Thune candidly acknowledged that the politics just aren’t playing out for the GOP, and that members don’t want to take a tough vote against regulating Wall Street.

“I think it’s a difference between perception and fact, because the facts are very different than the perception,” Thune told TPMDC and two other reporters. “I think the Democrats believe that they can get political advantage by painting the Republicans as protecting Wall Street…. The perception right now is what’s driving this.”

Republican members and leaders still insist that it was a letter, written by Minority Leader Mitch McConnell that forced Democrats‘ hand, and opened them up to GOP ideas. But it wasn’t the Democrats who eased up. Republicans hard charging rhetoric carried through Monday, three days after McConnell delivered the letter to Majority Leader Harry Reid. By the end of the day Republican unity began to soften. The political charge of the issue preserved the Democrats’ leverage, and they continue to insist that they’ll force the GOP to take the tough vote if a deal isn’t reached.

Today, in the Dirksen cafeteria, Sen. Richard Shelby (R-AL), the Republican point man on financial reform, told TPMDC that a global deal on a bill is well within reach. “We’re very close to a deal and there will be a substantial number of Republicans that go along with it,” he said.

His optimism was paired with a sign of actual movement on votes: Sen. Chuck Grassley (R-IA) voted with Democrats on the Agriculture committee to advance legislation to regulate derivatives–a package that will be incorporated into the broader reform bill. And it was echoed a few hours later by three other Republicans–Sens. Saxby Chambliss (R-GA), Kay Bailey Hutchison (R-TX), and Orrin Hatch (R-UT)–who joined Shelby at a press conference to express optimism that they’re on the verge of a deal.

The blink will come as little surprise to Sen. Chris Dodd (D-CT), the lead negotiator for Democrats, who’s been saying for weeks that Republicans privately tell him that they want to get out from under the thumb of GOP leadership.

After all, the conservative base, like the liberal base is united on just one issue.

“The one guaranteed applause line whether you’re addressing a tea party or liberal bloggers is making sure never again the American taxpayer will have to bail out Wall Street,” Sen. Mark Warner told TPMDC in an interview.

“What the market wants most is predictability and we can come up with a bill that affects the rules of road for 50 years,” said Warner (D-VA). “Most folks around here know that 18 months after the meltdown should be enough time to put new rules in place.”

“This issue is not philosophical,” Corker told TPMDC this afternoon. “It shouldn’t be… This is the place where the Senate can function like it’s supposed to. Maybe this is a beginning point towards us actually moving away from the dysfunctional place we’ve been.”

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