Republicans want a complete do-over of financial regulatory reform legislation, rejecting a plan to tinker around the edges of a bill that Democrats hope to pass this month.
“What we ought to do is get back to the table and have a bipartisan bill, which is what we don’t have at the moment,” said Senate Minority Leader Mitch McConnell, R-Ky.
Senate Majority Leader Harry Reid, D-Nev., said as early as last week the Senate could begin consideration of the measure, which would increase the regulation of banks and capital markets and give the federal government the power and a $50 billion fund to liquidate large financial institutions on the verge of collapse.
Republicans are struggling to appear pro-reform while opposing the Democratic plan. They have been specifically critical of the $50 billion fund, saying it will institutionalize government bailouts. The Obama administration has also called for the fund to be dropped, but McConnell, speaking on CNN’s “State of the Union,” said he was still not satisfied.
All 41 Republican senators signed a letter sent to Reid on Friday, asking him to scrap the current bill and try again with Republicans to produce a bipartisan measure. The letter warned Reid that Republicans “are united in our opposition to the partisan legislation” they believe Democrats have written.
In addition to the bailout fund, which would be created by taxing the financial sector, Republicans are opposed to some of the new regulatory powers that they fear will stunt the growth of small businesses.
“The American people are saying, we don’t want another bailout, but they also don’t want a kind of perpetual government massive interventions across the board running private businesses,” McConnell said.
But Democrats are hoping that with the removal of the bailout fund they will be able to sell the bill to at least one Republican needed to prevent a GOP filibuster.
“I’m very confident you will see Republicans vote for this,” Treasury Secretary Tim Geithner said on NBC’s “Meet the Press.”
Geithner said he has been working for months with the Senate on creating a bill and said Republicans and Democrats “are very close” on a bipartisan measure, particularly when it comes to creating a new category for “too big to fail” firms that will empower the government to wind them down in a way that protects taxpayers.
But Geithner acknowledged there is little agreement with Republicans over how to regulate complicated investments and implement consumer protections.
The Democrats’ bill would create a Consumer Financial Protection Bureau that is aimed at providing more safeguards for consumers, but Republicans, responding to complaints from banks, say the new entity might undermine them by creating new stringent rules. Republicans also oppose the Democrats’ plan to regulate certain types of commodities investments, but President Obama is threatening to veto a bill that does not include it.
“We are not together on everything,” Geithner said. “On derivatives and consumer protection we are some ways apart, and we may not get there.”
