Wall Street Reform Package Is Being Toughened By Public Debate

Wall Street Reform Package Is Being Toughened By Public Debate

Battling to delay Wall Street reform from hitting the Senate floor, Republicans worried that once the bill was being debated in public, it would be harder to pull it in a conservative direction. "[O]ur best opportunity to improve it is before it hits the floor," a top GOP aide reasoned as the party took a PR beating for filibustering the bill.

Those fears were well founded. Since debate opened, transparency has pushed the bill in a progressive direction; the bill has repeatedly been strengthened with Democratic amendments, while Republican changes have either been kept from debate or voted down.

The latest amendment to toughen up the bill came Thursday, pushed forward by Sen. Al Franken (D-Minn.) against the objections of Banking Committee Chairman Chris Dodd (D-Conn.), who succumbed to pressure to consider a measure that would end the practice of banks choosing their own rating agency for a particular project. Instead, an independent panel would randomly assign an agency to a specific offering, removing the incentive for a rater to give a generous review in exchange for the business. During the crisis, financial products that had been blessed with AAA ratings were found to be little more than garbage, undermining confidence in the integrity of the market.

The amendment passed 64-35, with 10 Republicans backing it and 30 (plus Joe Lieberman) opposed. [UPDATE: The Franken amendment drew inspirations from Demos Senior Policy Analyst James Lardner's suggestions laid out here in the American Prospect.]

On Tuesday, the Senate attached a Bernie Sanders amendment to the bill that will force a one-time audit on the Federal Reserve. The amendment was less comprehensive than an alternative, but far broader than what was already in the bill.

On Wednesday, Sens. Jeff Merkley (D-Ore.) and Amy Klobuchar (D-Minn.) passed an amendment banning "liar's loans" and payments to mortgage brokers who steer borrowers into high-risk loans.

On the same day, the Senate turned back an effort by Saxby Chambliss (R-Ga.) to gut a provision from Blanche Lincoln (D-Ark.) that would bar commercial banks from trading certain derivative contracts. That provision, however, could be in trouble after Lincoln's primary pressure is relieved by the election on Tuesday.

But the longer Wall Street drags out the fight on the Senate floor, the more licks progressives will be able to get in. Those gains, however, will need to be protected in conference committee negotiations, which generally take place behind closed doors.

Things could still get worse for Wall Street. A measure from Merkley and Sen. Carl Levin (D-Mich.) to implement the so-called "Volcker Rule" is in line for a vote in the days ahead. The amendment would ban commercial banks from one of their most profitable ventures: day-to-day trading in the market with taxpayer backed funds.

Big Oil is also suffering from the extended public debate. On Thursday afternoon, according to a leadership aide, the Senate will vote on an amendment from Democratic Sens. Bob Menendez and Frank Lautenberg of New Jersey and Bill Nelson of Florida. The measure will require oil companies to pay all costs of spills rather than capping the damage.

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