Are Democrats Too Confident About Wall Street Reform?

You’d think that after watching the four month health care fight turn into a year-long game of legislative Calvinball, Democrats wouldn’t take anything for granted. But when it comes to financial regulatory reform, they’re downright assured: they’re going to get a bill, and it’s not going to require any concessions to the GOP.

This confidence manifests itself in many ways.Congressional Dems are taunting Republicans, daring them to stand in the way.

“They need to be reminded that actions have consequences,” said Jim Manley, spokesman for Senate Majority Leader Harry Reid.

White House Press Secretary Robert Gibbs has said the whole thing could be over by May. And in at least one private meeting, President Obama has let it be known that he doesn’t want the legislation to become terribly watered down in the Senate–and thinks that’s a reasonable goal.

The House has passed its version of the legislation, Senate Banking Committee Chairman Chris Dodd has drafted a package of his own, and all Democrats have to do at this point is peel off one or two Republicans make a few tweaks and bring the thing up for a vote, right?

As you might expect, things aren’t as straightforward as they seem.

A number of Republicans have predicted that a bill will pass the Senate, but thus far, not a single one of them has indicated that they’ll break with their party and help Democrats pass the bill they want. In fact, experts and consultants say Republicans will almost certainly stand together to block a bill unless one element of the bill–the proposed Consumer Financial Protection Agency–is scaled back. At the very least.

Right now, Senate Banking Committee Chairman Chris Dodd is sounding out his Republican counterpart Richard Shelby to see if he can reach an agreement on a compromise bill that has guaranteed Republican support. But bipartisan negotiations have broken down repeatedly on this issue in the past several months, and much of the good will is gone.

If the two parties can’t reach agreement, Democrats and Republicans will find themselves in a game of chicken over a politically charged issue, with Democrats insisting Republicans are standing with bankers to block Wall Street reform, hoping that enough moderates join them to break a filibuster.

Even if that happens, though, there may still well be a largely partisan food fight on the Senate floor, with Republicans forcing tough votes on charged issues (think Fannie Mae and Freddie Mac).

Regardless of how it plays out, Democrats will have to keep the bill from diverging too sharply from the House’s product if the two are to be easily reconciled.

A May end date isn’t out of the question, of course. It’s just worth keeping in mind that legislating gets ugly, and it’s always dangerous to pre-emptively dance in the endzone.