For the second day in a row, Republicans beat back an attempt by Democrats to bring a sweeping financial regulatory bill to the Senate floor.
The 57-41 vote to block debate on the bill occurred as the two parties worked privately to reach an agreement on making changes to the Democratic bill, which as currently written would create special regulations for the biggest banks and establish a consumer protection agency.
Defeated Democrats are trying to use the Republican obstruction to their political advantage, arguing the GOP is siding with the Wall Street bankers behind the 2008 financial market collapse.
Senate Majority Leader Harry Reid, D-Nev., promised “more votes” on the bill this week, starting Wednesday, “and Republicans will have the opportunity to show whose side they are truly on.”
The major financial markets took a beating as fears about international debt drove shares lower, with powerhouse stocks like Apple and Ford leading the Dow Jones industrial average down 213 points to 10,990 — a loss of 1.9 percent.
But Goldman Sachs shares advanced two-thirds of a percent, rising $1.01 to $152.95, even as the S&P 500 Financials Index retreated 3.4 percent.
The Senate is debating financial reform legislation that could prevent banks from trading for their own accounts and require them to separate derivatives businesses from regulated depository subsidiaries.
But even as senators berated the company’s executives for taking huge profits from the collapse of the mortgage markets, investors flocked to the stock on an otherwise down day.
Many analysts believe that Goldman stands to benefit from the regulations because it will limit competition from smaller banks. – From staff, wire reports
The debate over the financial reform bill took place as senators publicly grilled Goldman Sachs executives over their investment practices.
Banking committee Chairman Carl Levin and other senators accused the executives of profiting by betting against the housing market while at the same time selling mortgage-backed investments to clients.
“How about the fact that you sold hundreds of millions of that deal after your people knew it was a sh
y deal?” Levin asked Goldman executive Daniel Sparks, citing company e-mails that have been made public.
If Democrats hoped the contentious hearing and repeated votes to begin debate would pressure Republicans to back the reform bill, it hasn’t worked so far.
“I don’t think they mean much,” said Sen. Orrin Hatch, R-Utah. “Everybody knows it’s a game and that we are negotiating.”
Sen. Christopher Dodd, D-Conn., author of the Democratic bill and chairman of the Senate banking committee, said he expects Republicans to ultimately vote to begin debate on the bill, but “in the meantime, they hurt themselves terribly in the eyes of the American public.”
Republicans argue they need more time to make changes to a bill they believe is too far-reaching and that will hurt small banks and businesses while institutionalizing bailouts of big financial institutions.
Sen. Richard Shelby, R-Ala., the top Republican on the banking committee, said the two parties disagree most on a provision in the bill that would create a consumer protection agency. Republicans believe the new agency would hinder smaller businesses including car dealerships, dental offices and any business that allows people to pay in installments.
“It’s so broad in scope and so deep it will affect everybody dealing with credit in this country, and people are now beginning to realize it,” Shelby told reporters.
Sen. Ben Nelson, D-Neb., also voted to block debate on the bill for the second time. Nelson said he is concerned the bill could hurt small businesses. He is also demanding new language regulating trading. Nelson’s state is home to Warren Buffet’s Berkshire Hathaway, which would be required to set aside billions of dollars under the bill in order to cover its current portfolio. Nelson owns between $1 million and $6 million in Hathaway stock.
“It’s not about Warren Buffet, it’s about 200 other companies that have said this needs to be prospective,” Nelson said.
