Will Financial Reform Pass This Week?

Monday night Senate Majority Leader Harry Reid (D-NV) filed a cloture motion on the financial reform bill. That means a final vote could be held as soon as Wednesday. Until then, the Senate will continue to hear amendments to the bill. But even if they aren't all in, the leadership could push to vote without them. If they do, will it pass?

Speaking more broadly about the bill's chances, Michael Grunwald of Time doesn't think they look good:

It's mostly an Occam's razor thing. Every House Republican voted against the bill the House passed last year. Every Senate Republican signed a letter opposing the bill the Senate is debating now. Big Finance is spending $1.4 million a day to fight reform, with a lobbying army that includes 70 former Congressmen and just about everyone who ever staffed a congressional banking committee. It's certainly possible that Congress would resist all that pressure, and the same Republicans who marched in lockstep against health reform would stop blasting President Obama's socialism long enough to hand him another huge victory before the 2010 elections.

It just doesn't seem all that likely.

The Republicans

It's easy to see where he's coming from. After all, Senate Republicans were even blocking debate at first, until finally consenting to at least hear the bill. Has that much changed so they now will support it? Not yet, but some necessary changes could be incorporated before the final vote.

Republicans did get a little of what they want -- but only a little. Most of the complaints about the original bill providing bailouts have been silenced by a few amendments. They got a weak Federal Reserve audit as well. But they didn't make any significant leeway on the consumer financial protection bureau, Fannie and Freddie, or derivatives.

They probably won't get anywhere regarding the first two of those priorities. Democrats aren't willing to compromise much further on consumer protection and have no intention of touching Fannie and Freddie. But derivatives could be a different story. There's some talk that after today's primary elections, Blanche Lincoln's (D-AR) aggressive derivatives regulation could be relaxed a little. Some controversial provisions may have been left in place only temporarily to help secure votes of her constituents angry at Wall Street.

If the derivatives section is made more favorable to Republicans, then you may see a few come over to support the bill. And that's all Democrats need. Remember, Republicans would prefer not to appear soft on Wall Street, but they also don't want to support regulation that could debilitate the financial market. A little compromise with derivatives could be all it takes.

Yet, one of the big players on the Republican side of the aisle, Sen. Bob Corker (R-TN), said in an interview with CNBC today that he thinks the bill will pass this week (video at end of the post):

Look we've got about four or five Republicans that I think are going to vote for this. I think we've always known that a financial regulation bill is going to pass. And it is. I'm not going to vote for it, unless there's something miraculous that occurs here in Washington over the next 36 to 48 hours, which I know is not going to be the case. Ya know, I'm just being honest with you. We're going to have a financial reg bill. I don't support it, but I'm only one of 100 Senators.

He also said that there are around five Republicans who have consistently voted in such a way that would indicate their support of the bill. It's surprising to hear Corker so confident that several Republicans will vote in favor of the legislation, as that would be a change from a few weeks ago when all Republicans at first blocked debate.

The Democrats

Republicans votes might be tough, but getting Democrats on board should be the easy part, right? Not necessarily. Some may not vote for the bill unless their amendments are heard. Politico reports:

Sen. Byron Dorgan (D-N.D.) has said he will filibuster the bill unless the Senate votes on his amendment banning a speculative financial instrument known as a "naked" credit default swap. Sen. Maria Cantwell (D-Wash.) has done the same, saying she needs a vote on her amendment separating commercial and investment banking operations.

Still, it shouldn't be that hard for Reid to provide his fellow Democrats a little extra time to get their amendments in. Even if that delays things by a day or two, obviously it would be worth having a few more votes.

So will financial reform pass? Probably. Will it pass this week? If all Democrats are satisfied that their amendments were heard and the derivatives section is revised to appease Republicans, then it likely will. If one or both of those criteria aren't satisfied, however, it might take a little more time.

Presented by

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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