They’re close to a deal, they’re not close to a deal, they’re talking, they’re not talking.
The final Wall Street reform negotiations have been beset by delays as key members hash out compromises on the two outstanding (and deeply consequential) aspects of financial regulatory reform.
First there’s the so-called Volcker rule. Then there’s the question of derivative regulations. The more difficult fight is over the latter, so let’s deal with it first.
House Democrats with close ties to big banks have threatened to bolt from the whole bill over proposed new derivatives rules in the Senate bill. If passed they would require major financial firms to dissociate from their derivative trading desks. Certain New Democrats and members of the New York delegation wants that particular measure scrapped. That sounds complicated, but the basic idea is to forbid federally insured firms from taking the sorts of risky gambles that could cause them to collapse.The plan was authored by Sen. Blanche Lincoln (D-AR), who’s facing re-election this year, running on her far-reaching plan to rein in Wall Street, and loathe to give much ground. She has declined to meet with the restive House Dems, but did meet last night with House Speaker Nancy Pelosi, who supports Lincoln in principle, and yet is trying to hold together a large enough coalition to pass the final legislation.
At her weekly press conference this afternoon, Pelosi was unable to say one way or another whether she could pass a final bill in the House if the swaps desk provision remains in the bill.
The Volcker rule is a somewhat different story. Volcker is a less-targeted series of regulations that would force banks and financial firms from speculating with their profits. Senators are said to be near agreement on the final language of Volcker. Sen. Scott Brown (R-MA) on the one hand is arguing for loopholes that will benefit big banks and insurance companies in his state, and progressives on the other are trying to keep the measure as strict as possible.
As the prospective 60th vote for reform, Brown has a lot of sway in these negotiations. Things would be much different if Democrats were united. But two of them–Sens. Russ Feingold (D-WI) and Maria Cantwell (D-WA)–oppose the legislation from the left. As such, a number of Democratic senators are frustrated with both for handing Brown and other moderate Republicans so much leverage.
Pelosi told reporters today that the Volcker rule has broad support in her caucus, so it’s the easier lift overall. Complicating matters, though, is that derivatives and Volcker are interconnected and it’s logistically difficult to write either section when the other is incomplete
So what happens in the unlikely event of a blowup? When proceedings began this morning, Sen. Bob Corker (R-TN), who was once one of the GOP’s top financial reform negotiators, made it clear that he’s still willing to deal. He expressed surprise that the legislation had been “hijacked” by a couple senators who were never really involved in the issue, hinting “there’s more than one way to get to 60.”
I caught up with Corker in the hallway outside the hearing room shortly thereafter for clarification. He said, as he has in the past, that if Dems deal with him on a few key issues they could have a surfeit of votes for the final bill, without having to haggle with their own members over the parochial concerns at stake today. He recounted a dinner he had last night with a Democratic conferee he wouldn’t name, but who put a hypothetical offer in front of him. If that was the deal, the Democrat asked, would you take it?
“Yes,” Corker said.