Senate Strategy on Financial Reform

Last week, I wrote about the financial reform battle in the Senate. It's shaping up to be a fascinating political struggle. Since then, I learned more about strategies being mulled over by Senate Banking Committee Chairman Christopher Dodd (D-CT) and Republicans to get a bill passed. All seem dedicated to the cause: it's just a question of how to get there.

Political strategy is exceedingly difficult to pull out of Congressional staffers, so I didn't have much luck in getting many on-the-record statements. But here's a summary of what I've managed to piece together. Just keep in mind that strategies are still evolving, especially on the Republican side of the aisle.

The No Mark-up Plot Thickens

I covered the decision not to mark-up the bill in the Senate Banking Committee in my prior post. I said that Dodd mostly drove the speed. I still think that's right, but I didn't adequately address what was going on in the Republican camp. They weren't all seeing the situation eye-to-eye. In particular, Senator Shelby (R-AL) wanted to forgo mark-up, while Senator Corker (R-TN) wanted to use the committee to revise the bill further. Ultimately, Shelby's strategy won out, and Corker was not pleased. But he now says that he will "fold in behind" the Republican leadership and work with them to pass a bill.

Making It Dodd's Bill

Shelby was convinced that offering amendments in committee would be a fruitless endeavor. He now may be seeking to work with Dodd to craft a broad bipartisan amendment to offer when the bill hits the Senate floor. If that happens, Shelby could potentially bring something like half of the Republicans in the Senate with him. From what I hear, the ideological divide between the two parties isn't as great as you might think -- nothing like it was with health care reform. If several changes are made, many Republicans could jump on board.

Dodd might really like this approach. It's his final term in the Senate, and there's little doubt that he'd love this to be his bill -- not House Financial Services Committee Chairman Barney Frank (D-MA) and Treasury Secretary Timothy Geithner's bill. Remember, even if Dodd loses half-a-dozen liberal Democrats, if he gets 20 or so moderate Republicans, a bipartisan bill will easily pass.

And if he gets bipartisan support in the Senate, it would be very difficult, politically, if the House and White House reject his changes -- even though they might be tempted to pull the bill further left. If they did, when the bill goes back to the Senate after conference, then those Republican votes would be lost and Dodd would have to hope a few decide to stick around.

If Compromise Doesn't Work

If Shelby and Dodd can't produce a bipartisan push, then neither Dodd nor Republicans will likely be pleased. That would mean that Dodd will be forced to pick off a few liberal Republicans to vote and essentially agree to the House/Treasury version. The bill would then ultimately contain very little of his influence.

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Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.

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