How Democrats Broke GOP Block on Financial Reform

Republicans have given signals that they will allow the Senate to proceed

It looked like bad news for Democrats when a Senate test vote to begin formal debate on financial regulatory reform failed due to unified GOP opposition. Republican senators even came up with their own version of the plan, which some pundits read as a sign they didn't plan on cooperating with the Democratic bill. But now Senate Minority Leader Mitch McConnell, citing a "key agreement," suggests Republicans will no longer block debate. What does this mean? How did Democrats get the Republicans to come around?

• Dems Planned to Force GOP's Hand  Talking Points Memo's Brian Beutler reports on the unusual Democratic plan. "Frustrated by an ongoing campaign by the GOP to block debate on financial reform legislation, Democrats plan to hold the Senate floor open all night, potentially holding repeated votes to break the filibuster, or forcing Republicans to publicly object to debating their bill."

• GOP Won Changes to Final Bill  National Review's Daniel Foster writes, "It looks like there will be Republican-urged changes to the resolution authority, but that talks about changes to the sprawling consumer protection agency went nowhere. ... This seems to clear the way for a liberal/centrist Republican or two to reverse course, vote for cloture, and get some sleep tonight."

• What Dems Conceded  The Hill's Alexander Bolton says McConnell is "touting 'a key agreement' to resolve disagreements over a $50 billion fund to liquidate troubled banks.

McConnell said that Democrats have agreed to close “loopholes” in a provision setting up the fund that would have allowed federal officials to draw on taxpayer dollars to wind down a troubled institution. Republicans argued these provisions would have put tens of billions in federal funds at risk for future bailouts. Democrats said all the money in the fund would be supplied by banks, likening it to a “pre-paid funeral account” for big institutions.

• Dodd and Shelby Reached Agreement  The Plum Line's Greg Sargent says it all came down to Democratic Senator Chris Dodd and Republican Senator Richard Shelby, who lead the Senate Banking Committee. "Dodd’s confirmation that he may be willing to reach a deal with Shelby on 'too big to fail bailouts,' or on the bank liquidization fund, may leave Republicans little choice but to allow this to go to a debate, the aide says. That’s because this was one of the primary sticking points for many Republican Senators."

• Partisan Divide Far From Bridged  Time's Jay Newton-Small reminds us, "At the same time, several issues remain outstanding, as McConnell notes. Those talks have broken down and will likely have to be hashed out on the floor, if they can be. The Republican conference will be meeting at 4:30pm today to discuss how best to proceed."

• Credit the Kentucky Derby  The Washington Post's Ezra Klein posits, "if the Democrats are serious about forcing the Republicans to really filibuster the bill, this is the right week for it: The Kentucky Derby starts Friday, and Kentucky's senior senator, Mitch McConnell, would surely prefer to attend. Given that his members are already talking about breaking ranks, McConnell may find himself eager to get this kabuki dance over with a little bit early."