Financial Reform

Its A Draw! Bank-Friendly Dems And Progressives Finalize Wall Street Bill

Brian Beutler | June 25, 2010, 8:57AM

Rep. Barney Frank (D-MA), Senate Majority Leader Harry Reid (D-NV) , Speaker of the House Nancy Pelosi (D-CA) and Sen. Christopher Dodd (D-CT)

In the wee hours of Friday morning, along party lines, House and Senate negotiators settled on the final shape of legislation meant to rein in Wall Street. The deliberations were tense at times, with House members forced to accept many of the Senate's positions, and legislators with close ties to Wall Street at loggerheads with progressives seeking to make the bill as restrictive as possible.

In the end, they fought to a draw.

Wall Street won a number of battles, but broadly speaking the conference committee strengthened the legislation in some ways, weakened it in others, and for the most part the final bill pretty closely resembles the legislation that passed the Senate this spring.

Read more »

Blanche Lincoln

Dems Fight Each Other Over Major Wall Street Reform Measures

Brian Beutler | June 24, 2010, 5:17PM

Speaker Nancy Pelosi (D-CA) and Senator Blanche Lincoln (D-AR)

They're close to a deal, they're not close to a deal, they're talking, they're not talking.

The final Wall Street reform negotiations have been beset by delays as key members hash out compromises on the two outstanding (and deeply consequential) aspects of financial regulatory reform.

First there's the so-called Volcker rule. Then there's the question of derivative regulations. The more difficult fight is over the latter, so let's deal with it first.

House Democrats with close ties to big banks have threatened to bolt from the whole bill over proposed new derivatives rules in the Senate bill. If passed they would require major financial firms to dissociate from their derivative trading desks. Certain New Democrats and members of the New York delegation wants that particular measure scrapped. That sounds complicated, but the basic idea is to forbid federally insured firms from taking the sorts of risky gambles that could cause them to collapse.

Read more »

Financial Reform

Pelosi: Dems Still At Impasse Over Derivatives

Rachel Slajda | June 24, 2010, 2:57PM

Sen. Blanche Lincoln (D-AR)

House and Senate leaders are still at an impasse over derivatives language in the financial regulatory reform bill, as conferees try to hammer out a compromise between the two versions.

House Speaker Nancy Pelosi, in fact, met with Sen. Blanche Lincoln (D-AR) to try to dislodge Lincoln from her position on the language, to no avail. As chairman of the Agriculture Committee, Lincoln wrote the derivatives language, including a provisions that would require banks to spin off their derivatives trading operations. The swap desks provision, as it's called, is unpopular among Democrats and banks.

Read more »

Wall Street

Wall Street's Big Day: House And Senate Weigh Gutting Key Financial Reform Proposals

Brian Beutler | June 24, 2010, 10:45AM

Sen. Chris Dodd (D-CT) and Rep. Barney Frank (D-MA)

Today is a pivotal day for Wall Street. Billions of dollars and a tremendous amount of risky trading are on the line in what are perhaps the final hours of negotiations over financial reform.

House and Senate conferees will soon determine whether two of the most important pieces of the legislation are as robust as reformers say they need to be, or whether big banks and other industries prevail in their push for loopholes, carve outs, and other exemptions.

Yesterday, House participants in the conference committee laid down an offer--a package of proposed tweaks--to the far-reaching section of the Senate bill dealing with derivative regulations. They seek a host of goodies for end-users (businesses and industries that trade in derivatives to hedge their risk) who want to be exempt from new transparency rules. But they don't propose any changes to the most controversial part of the bill: a provision, authored by Sen. Blanche Lincoln (D-AR) that would require mega-financial firms to break off their derivatives trading desks, and house them in affiliated businesses, where they won't be federally insured against failure.

Read more »

Financial Reform

Behind Closed Doors Four Key Democrats Maneuver To Weaken Financial Reform

Brian Beutler | June 17, 2010, 11:48AM

(Clockwise from top left) Reps. Dennis Moore (D-KS), Gregory Meeks (D-NY), Luis Gutierrez (D-IL), Mel Watt (D-NC)

Several House Democrats with close ties to the financial industry, including four members of the conference committee hashing out the final bill, are pushing to weaken the Wall Street reform legislation in the conference committee.

The 68-member New Democrat Coalition has been circulating drafts of a letter outlining their position on financial regulatory reform, proposing to significantly scale back regulations on derivative trading, and open up exceptions to the so-called Volcker rule, which limits financial firms' ability to speculate with their profits.

One draft of that letter, obtained by TPM, can be read here. Their position on derivatives provoked the ire of Americans for Financial Reform, the largest pro-regulation coalition in the country, which responded yesterday with a letter of their own.

Read more »

Financial Reform

Volcker Softens His Opposition To Tough Derivative Regulations

Brian Beutler | June 14, 2010, 2:08PM

Sen. Blanche Lincoln (D-AR)

One of President Obama's most influential advisers has softened his position on derivative reform, suggesting for the first time that he might be amenable to Sen. Blanche Lincoln's plan to force major financial institutions to spin off their lucrative swaps desks. The development comes as members of Congress who back Lincoln's plan push to preserve it as part of Wall Street reform legislation. But aides on the Hill who back the plan remain skeptical.

According to the Financial Times, former Fed chairman Paul Volcker has opened somewhat to the Lincoln plan, provided it not ban banks from hedging their own risk, or that of their customers, by trading in derivatives.

Just a month ago, though, Volcker, who chairs Obama's Economic Recovery Advisory Board, had a fairly cut and dry view: "I am...aware of, and share, concerns about the extensive reach of Senator Lincoln's proposed amendment," Volcker wrote in a letter to Senate Banking Committee Chairman Chris Dodd. "[M]y sense is that the understandable concerns about commercial bank trading in derivatives are reasonably dealth with in...your reform bill as presently drafted."

Read more »

Financial Reform

Senators Say Lincoln Victory Saves Tough Derivatives Regs

Brian Beutler | June 10, 2010, 9:49AM

Sen. Blanche Lincoln (D-AR)

A number of key senators returned to the Capitol after election Tuesday with good news for Wall Street foes. By defeating her primary challenger, Lt. Gov. Bill Halter, Sen. Blanche Lincoln (D-AR) has strengthened her hand in the final financial reform negotiations, and has given new life to a much-debated provision, which would require financial firms to spin off their derivatives trading desks. But the measure still faces broad and stiff opposition from powerful interest groups and the Obama administration, and there's little if any evidence that Lincoln's victory weakened their resolve to, at the very least, scale it back.

"She returns as the chairman of the Agriculture Committee, running for re-election in November, which I think gives her a strong bargaining position," Senate Majority Whip Dick Durbin told reporters yesterday.

The reasoning is simple: Facing a tough re-election challenge in November, Democrats will be loath to publicly undercut her, particularly given how great a role her contributions to Wall Street reform played in the Arkansas primary.

Read more »

Financial Reform

On Financial Reform, White House Frustrates Wall Street And Progressives

Brian Beutler | May 28, 2010, 1:38PM

President Barack Obama

The White House's heavy hand continues to guide financial reform negotiations as they enter their last days, creating a dynamic that has been frustrating to those who want to truly change the way business is done on Wall Street. As House and Senate principals put their heads together to iron out the differences between their two bills, the Obama administration is closing off most opportunities to impose the sorts of new rules that critics say will be needed in order to prevent another financial crisis.

And though the Obama administration is on guard against some of the flagrant efforts on the part of lobbyists to weaken the bill, it has also set strict parameters on the extent of the legislation, leaving some of the bill's supporters concerned that the overall approach simply isn't strong enough.

Perhaps the best example of this dynamic revolves around a far-reaching proposal to regulate derivatives. The White House and its lieutenants in the House and Senate are prepared to scale back or remove a provision that would require big financial firms to spin off their derivatives trading desks. And they're arguing to members that a different measure, limiting the extent to which those firms can engage in speculative trades with their profits, will accomplish the same goals as the spin off plan.

Read more »

Financial Reform

No Biggie! Gregg Says Derivatives Rules Likely To Be Scrapped From Wall Street Bill

Brian Beutler | May 25, 2010, 8:41AM

Sen. Judd Gregg (R-NH)

Sen. Judd Gregg (R-NH) says it should be no biggie for Congress to scrap a controversial proposal in the Senate Wall Street reform bill that would prevent large financial firms from trading derivatives in-house.

Last night I asked him whether anti-Wall Street sentiment might make it more difficult for House and Senate negotiators to get rid of the so-called "spin off" plan. Gregg shrugged it off.

"I wouldn't think so, because it's logical and it's good language," Gregg said.

Read more »

Financial Reform

Will Wall Street Reform Negotiators Publicly Weaken Derivative-Trading Regulations? (VIDEO)

Brian Beutler | May 21, 2010, 3:26PM

Sen. Mark Warner (D-VA)

They are doing it live--at least according to House Financial Services Committee Chairman Barney Frank.

After a White House meeting with President Obama, and his Senate counterpart Chris Dodd today, Frank told reporters that no changes will be made to Wall Street reform legislation during final negotiations behind closed doors.

"We will have a conference, I think, that will work well. It will be conducted, the formal parts, in public," Frank said. "That means that no agreements reached, no compromises, which obviously are being discussed, will be made part of anything without being publicly presented and voted on and discussed."

Read more »

Financial Reform

Dodd Drops Plan To Scale Back Derivative Regulation

Brian Beutler | May 19, 2010, 12:50PM

Sen. Blanche Lincoln (D-AR)

A far-reaching proposal to regulate derivative trading will not be scaled back in Wall Street reform legislation, at least for now, multiple Senate aides confirm. The development comes as welcome news to an unusual mix of progressives, financial officials, and at least one conservative Democrat: Sen. Blanche Lincoln (D-AR).

Lincoln is the author of the derivatives title in the Senate's financial regulation bill, and for weeks has faced opposition from Wall Street, the White House, and members of her own party over a provision to force financial firms to spin off their derivatives trading desks into stand-alone entities.

The proposal to weaken the derivatives title was ultimately drafted by Senate Banking Committee Chairman Chris Dodd--the Democrats' chief financial reform negotiator--and introduced yesterday at the eleventh hour of the debate over Wall Street reform. In it, Dodd proposed kicking the spin-off provision down the road for two years pending review by federal regulators, many of whom are already unfavorably disposed to it.

Read more »

Blanche Lincoln

Down To The Wire: Democratic Leaders Scramble To Keep Financial Reform From Unraveling

Brian Beutler | May 19, 2010, 9:06AM

Sen. Chris Dodd (D-CT)

What had been a fairly non-contentious debate over Wall Street reform legislation nearly came off the rails on Tuesday after Republicans--tacitly backed (or at least unimpeded) by top Democrats--used Senate rules to block votes on far-reaching, consumer-friendly amendments, portending a potential progressive revolt.

This afternoon at 2 pm, Senate Majority Leader Harry Reid will attempt to bring debate on the financial reform bill to a close, though it remains unclear whether he has the 60 votes he'll need to prevail.

A big reason for that? A number of Democrats--most vocally, Sen. Byron Dorgan (D-ND)--have threatened to vote against ending debate until their flagship amendments get a vote on the floor. But Republicans are standing in the way, saying they'll filibuster those amendments, subjecting each to a 60 vote requirement, and, more importantly, several days' worth of delay. Faced with a choice between picking a fight with Republicans over those amendments and simply moving ahead with the bill, Democratic leadership has, for now, chosen the latter.

Read more »

Financial Reform

Dems Take First Step Toward Gutting Key Wall Street Proposal

Brian Beutler | May 18, 2010, 9:08PM

Senator Chris Dodd (D-CT)

There's now officially a plan to scale back Blanche Lincoln's far-reaching proposal to regulate derivatives, and it comes from a leading Democrat.

At issue remains Lincon's plan to force financial companies to spin off their derivatives trading desks into distinct entities. Today, minutes before the noon filing deadline, Senate Banking Committee Chairman Chris Dodd introduced legislation to delay the spin-off provision for two years, pending review by federal regulators, and likely scotching it altogether.

Already, progressive and conservative senators are rebelling against the Dodd plan--though it's unclear if or when the plan will get a vote. And, as reported here last week, the timing spares Lincoln, who's facing a primary election tonight, the political embarrassment that would have accompanied gutting the most controversial and populist element of her plan. In fact, the plan itself could give Lincoln cover to argue that her proposal has been preserved. Though in a statement issued today, Lincoln reiterated her support for her amendment and vowed to fight to preserve it.

Read more »

Financial Reform

Sources: Dems Seek To Protect Lincoln By Delaying Action On Wall Street Reform

Brian Beutler | May 13, 2010, 8:53AM

Sen. Harry Reid (D-NV) and Sen. Blanche Lincoln (D-AR)

One of the most far-reaching pieces of the Senate's Wall Street reform bill has powerful enemies. The White House doesn't like it. FDIC chief Sheila Bair doesn't like it. Obama adviser Paul Volcker--the patron saint of financial reform--doesn't like it. And neither do a number of key Democrats, including Banking Committee Chairman Chris Dodd. All of them say that a controversial proposal to force financial firms to spin off their derivative-trading desks into separate entities goes too far.

But they may have gotten themselves stuck with it--at least for now. With their assent, the plan was authored by Sen. Blanche Lincoln (D-AR), who designed it to guard her left flank against a somewhat formidable primary challenge, and has been boasting of it on populist grounds for weeks. And that according to Republican and Democratic Senate sources, has led Democrats to quietly agree to postpone any changes they decide to make to her proposal until after this Tuesday's election has passed, to avoid embarrassing her in front of voters.

Read more »