With a vote on the financial reform bill in the Senate set to occur in less than an hour, sources indicate that Banking Committee Chairman Chris Dodd (D-CT) has decided not to compromise on derivatives. Yesterday, he introduced a last-minute amendment which would have given a council of regulators and the Treasury Secretary the option to kill a controversial provision that would have forbid banks from dealing derivatives. But now, Bloomberg is reporting that a Senate aide says that he won't offer the amendment after all. What changed his mind? Here are a few theories.
He Doesn't Have the Votes With the Compromise
It's possible that Republicans have decided to band together and vote against the bill, despite the amendment. If that's the case, then there would be no point in him keeping it. To be sure, the entire purpose of revising the derivatives language was to get Republican votes. If it didn't accomplish that, then why bother? The vote will fail either way.
He Has the Votes Without the Compromise
On the other hand, he may have determined enough Republicans were on board even without the amendment. If he doesn't need to compromise for the bill to pass, then why would he? If Republicans were satisfied with the bill as is, then he wouldn't need this revision.
He's Protecting Sen. Lincoln
The last-minute introduction of an amendment to water down the derivatives section of the bill was predicted, since it was believed that Democrats were protecting the legislation's author, Sen. Blanche Lincoln (D-AR), who was enduring a brutal primary battle. She wanted to appear tough on Wall Street to appeal liberal voters. But she didn't win on Tuesday. Instead, a run-off was forced. That means she still needs protection. If she convinced Democrats that they can't alter her provision, then Dodd's compromise might have been put aside.
That final option seems a little unlikely, mostly because passing financial reform is probably a more important priority than protecting one senator, who could instead just argue that she tried to keep the provision but the Democratic leadership overruled her. If the bill does pass without this amendment -- and the derivatives spin-off provision is left intact -- then it could still be eliminated during the conference process. Perhaps Senate Democrats find that a politically preferable alternative to killing it now? That is, if they have the votes to pass the bill without the compromise. If they don't, the decision is baffling.
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