POLITICS
06/25/2010 05:12 am ET | Updated May 25, 2011

Senators Push For Deal On Financial Reform Bill (VIDEO)

WASHINGTON - The Senate's top negotiators on financial overhaul legislation said Sunday they were not optimistic about striking a bipartisan agreement on key features of the sweeping bill, even as Majority Leader Harry Reid (D-Nev.) vowed to move ahead with the legislation, setting the stage for a showdown vote on Monday.

Sen. Richard Shelby, the top Republican on the Senate Banking, Housing and Urban Affairs Committee, predicted all 41 GOP senators would vote to delay the start of debate, unless continuing weekend talks led to a deal.

Senate Minority Leader Mitch McConnell said he didn't expect the bill, as drafted by Democratic Sen. Chris Dodd, the chairman of the committee, would go forward.

"We want to make sure that they don't have the same kind of approach on financial services that they did on health care," McConnell, R-Ky., said on "Fox News Sunday."

Dodd said he hoped at least one or two Republicans would vote Monday with Democrats on beginning debate. He said he held out hope a deal could be struck in the coming days.

Both men have negotiated a bill off and on for months. The impasse reflected differences over how to contain large, interconnected financial firms and how to liquidate them when they fail. But Democrats and Republicans also differed on how to protect consumers and how to set limits on previously unregulated exotic instruments such as derivatives.

"We're conceptually very, very close," Shelby said on "Meet The Press". "We're closer than we've ever been."

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Senate Majority Leader Harry Reid has vowed to push forward with the bill, determined to either get enough Republican support to overcome delays or brand Republicans as obstructionists and handmaidens of Wall Street.

Reid and Dodd need 60 votes to begin debate on the bill -- and there are 59 Democrats and Democratic-allied independents.

On Friday, American Prospect editor Robert Kuttner outlined the divisions within the Senate, with progressives urging Democratic leadership not to cut a deal with the Republicans.

On Thursday, there was an uncharacteristically fractious meeting of the Senate Democratic Caucus. On one side, leading progressives such as Maria Cantwell, Ted Kaufman, Dick Durbin, Byron Dorgan, and Jeff Merkley, argued that this was a moment to put forward floor amendments that would both strengthen the bill and force Republicans to take difficult votes either backing reforms or identifying themselves with Wall Street.

But the Banking Committee Chairman, Chris Dodd, was more inclined to try to strike a deal over the weekend with his Republican counterpart, Richard Shelby, for a bipartisan bill. The price of this would be weaker provisions on derivatives, consumer protection, the Volcker rule, and on resolving failed large banks. The political price would be that progressives don't get to offer floor amendments. Under Dodd's scheme, which is favored by Obama's legislative and economic advisers, the Senate would immediately vote to take up the bill and would then vote cloture by a wide bipartisan margin. The bill -- still a shell with details to be filled in later -- would go directly to the House-Senate conference, where the House-passed bill would become the vehicle for the final measure.

The House has already passed its version of the legislation. Both the House and Senate bills represent the broadest overhaul of Wall Street regulations since the Great Depression. They would create a mechanism for liquidating large firms, set up a council to detect system-wide financial threats, and establish a consumer protection agency to police lending. The legislation also would require derivatives, blamed for helping precipitate the meltdown, to be traded in open exchanges.

Dodd and Shelby, in a joint appearance on NBC's "Meet the Press," spoke more as partners than antagonists. But the lack of a deal at this stage underscored the pressure on Dodd to not cede any more ground than he already has during months of negotiations with Shelby and with Sen. Bob Corker of Tennessee, another Republican on the banking committee.

"We can't take care of everything in the bill," Dodd said, referring to his talks with Shelby. "Obviously our colleagues will want to be heard."

Corker, appearing on ABC's "This Week," said he hoped Dodd and Shelby would reach agreement on a "template" that would permit more changes to occur through amendments on the Senate floor.

"I want to see a bill," Corker told host Jake Tapper. "I think we do need to address regulation in our financial markets. You know, it's in play right now. .. "I know [Shelby and Dodd are] going to continue meeting, hopefully getting to a compromise before tomorrow evening."

"If we can get that template agreed to in a bipartisan way, then we can debate some of the amendments that Sherrod Brown wants to bring forth, some of the amendments I want to bring forth," Corker continued. "But I think it's very, very important that we reach that bipartisan agreement first, because in the Senate, as you know, it takes 60 votes to change anything."

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Despite their differences, Republicans and Democrats have both wrapped themselves in anti-Wall Street rhetoric.

Corker on Sunday said he intends to offer an amendment that would recoup earnings from executives of firms that fail and have to undergo liquidation. Under Dodd's bill, management of a firm undergoing liquidation would be fired.

The broad regulatory overhaul has already passed the House. It aims to prevent a recurrence of the financial crisis that struck Wall Street in 2008 and prompted a massive government bailout of some of the nation's biggest financial institutions.

Shelby said he specifically wanted to tighten language in Dodd's draft bill that he said would give the Federal Reserve and the Federal Deposit Insurance Corp. too much flexibility to assist banks in trouble.