Dodd: Wall Street Reform Conference Committee Will Be Reopened
UPDATE - 4:19 p.m. - The conference committee will meet at 5:00 Tuesday afternoon to make final changes to Wall Street reform. Ahead of the gathering, Rep. Barney Frank (D-Mass.) told reporters that he had been informed that Sen. Maria Cantwell (D-Washington) would now be voting for the final bill, though he added that he had not spoken to her. A Cantwell spokesman didn't immediately respond a call, but earlier in the day, Cantwell told HuffPost that she was reviewing the legislation to determine whether changes she had sought in the derivatives section could be made during the rule-writing process by the Commodity Futures Trading Commission. He had also been told, he said, that Sens. Olympia Snowe (R-Maine) and Susan Collins (R-Maine) were on board.
UPDATE - 2:53 p.m. - Sen. Chris Dodd (D-Conn.) told reporters that he plans to re-open conference committee negotiations Tuesday afternoon in an effort to win the GOP votes needed to overcome a filibuster. Sens. Scott Brown (R-Mass.), Olympia Snowe (R-Maine) and Susan Collins (R-Maine) objected to a fee imposed on major banks. Collins told reporters she met with Dodd for an hour Tuesday morning to outline her concerns.
Without the fee, the bill would increase the deficit by some $20 billion. Dodd proposed raising roughly 90 percent of that by ending the TARP program early and by increasing FDIC fees on all banks.
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Negotiators have yet to file the Wall Street reform conference report on the House floor, meaning that Democrats can still reopen bicameral conference committee negotiations over the shape of the final bill. House leaders are waiting to file until they have a signal from the Senate that Democrats in the upper chamber have the 60 votes needed to overcome a GOP filibuster, a spokesman for Rep. Barney Frank (D-Mass.) told HuffPost.
"We have a pay-for problem," he said.
Democrats are having difficulty finding the 60 votes because Republicans who previously voted for financial reform are now objecting to fees and assessments the final bill levies on major banks in order to pay for the resolution of failing institutions.
The fees assessed to the big banks are modeled after the Federal Deposit Insurance Corporation's system for seizing and liquidating failed banks. Banks pay into the insurance fund and when one bank goes bad, the FDIC comes in on a Friday, protects depositors, sells off parts of the bank and re-opens it under new ownership. The system is designed to build confidence and prevent bank runs.
Democrats initially proposed a $50 billion fund that would be used to wind down failing megabanks. But Republicans, led by Sen. Mitch McConnell (R-Ky.), repeatedly referred to the set-aside money as a "permanent taxpayer bailout." The fund was stripped and replaced by fees on major banks that would amount to roughly $3 to $4 billion per year until the fund's coffers are filled with roughly $20 billion. If the money hasn't been used within 25 years, it goes toward deficit reduction.
Republicans say they will have trouble voting for Wall Street reform if it includes any taxes on Wall Street. "I was surprised and extremely disappointed to hear that nearly $20 billion in new assessments and fees were added in the wee hours of the morning by the conference committee," said Brown on Friday. "I've said repeatedly that I cannot support any bill that raises taxes."
Sen. Susan Collins (R-Maine), who voted for the bill the last time around, told reporters Monday she is "not happy with the $19 billion new fee, or tax, that would be imposed that did not have consideration in the Senate."
Her Maine Republican colleague, Sen. Olympia Snowe, said that "obviously I'm concerned, anytime you're placing taxes in the legislation that was not in the Senate bill."
Sen. Russ Feingold (D-Wisc.) plans to join Republicans in filibustering the bill, he said on Monday, arguing that the bill doesn't end the policy that deems some banks implicitly too big to fail. Sen. Maria Cantwell (D-Wash.), meanwhile, opposed the bill before conference and has yet to say how she'll vote this time. Without Cantwell or a replacement for Sen. Bob Byrd (D-W.Va.), who passed away Monday, Democrats need all four Republicans who voted for the underlying Senate bill to agree to approve the conference report.