Barack Obama

Obama Administration Walks Volcker Rule Tightrope

Brian Beutler | May 22, 2012, 5:34AM

President Barack Obama

The Obama administration will likely tighten rules to prevent federally insured banks from speculating with their money after financial giant JP Morgan lost billions of dollars -- and continues to hemorrhage -- on a risky bet intended to pad the firm's profits.

The acknowledgment by a senior administration official Monday threatens to reopen a protracted fight between Wall Street allies and the White House over imposing new rules on big financial companies in the wake of the 2008 crisis.

The administration hasn't specified any particular steps it would like regulators to take to shore up the so-called Volcker Rule -- a bid perhaps to avoid an ugly public fight with powerful interests in an election year. But inaction -- or a too-tepid response to JP Morgan's losses -- will hurt President Obama with key allies, who want to use the debacle to further rein in Wall Street.

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Wall Street

One Last Chance To Get Wall Street Reform Right

Brian Beutler | May 18, 2012, 5:13AM

One of the most dogged Wall Street reformers on Capitol Hill says there's a small but golden opportunity to close key loopholes in the 2010 financial reform law, which were exposed to the public last week when banking giant JPMorgan announced it had lost billions of dollars betting with customer funds.

But after the window closes, he admits, it'll be a very difficult to re-open; and he sees no political path forward for other popular measures to further regulate banks, limit their size, or break them up into smaller entities.

"We have felt like there's two of us against hundreds of Wall Street lawyers working on this all day, every day -- and that the public was disengaged from the issue," Sen. Jeff Merkley (D-OR) told me during a Thursday interview in his Senate office. "Now the public is engaged. There's a chance here -- because the rules are supposed to go into effect in July -- there's a moment of possibility, we're trying to do all we can to press it forward, say 'seize this moment and get the rules right.' Because once they're put in place it's very hard to change them."

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Barack Obama

JP Morgan Scandal Raises Tough Questions For Obama Administration

Brian Beutler | May 11, 2012, 4:48PM

Mitt Romney will probably have a harder time defending his intent to repeal the 2010 Dodd-Frank Wall Street reform law in the wake of JP Morgan's stunning disclosure that it lost at least $2 billion betting on the economy.

But it also raises important substantive questions about the effectiveness of the new financial reforms themselves, particularly the one provision specifically intended to end just this sort of trading.

On a Friday conference call with reporters, Sens. Carl Levin (D-MI) and Jeff Merkley (D-OR) criticized regulators for writing a major loophole into the so-called Volcker Rule -- meant to prevent banks from betting with depositor funds -- at the behest of financial interests.

"It is inconsistent to create this kind of a major loophole," Levin said, noting that it goes against the intent of the reforms Congress passed.

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Super Committee

Senate Dems: Super Committee Bill Must Not Cost Jobs

Brian Beutler | September 22, 2011, 1:28PM

Sen. Jeff Merkley (D-OR)

In a Thursday letter to members of the joint deficit Super Committee, 11 Democratic senators say the powerful panel of House Democrats and Republicans must consider their recommendations' impact on job creation, and should result, at a minimum in no net job loss.

"[W]e request that the Select Committee adopt two principles: first, that each proposed recommendation be analyzed by the Congressional Budget Office to estimate its impact on employment," the letter reads. "Second, the Committee should adopt a "First Do No Harm" standard -- at a minimum its recommendations should not result in any net job loss and, ideally that they maximize new job creation while meeting the deficit reduction goals."

This effort was organized by Sen. Jeff Merkley (D-OR).

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Filibuster Reform

Tom Harkin Looks To Courts To Reform The Filibuster

Brian Beutler | January 28, 2011, 9:43AM

Sen. Tom Harkin (D-IA)

Senator Tom Harkin (D-IA), a long-time advocate of filibuster reform, was the lone senior senator to publicly align himself with Sens. Tom Udall (D-NM) and Jeff Merkley (D-OR) in their effort to change the Senate's rules.

Those efforts were neutered this week by the leaders of both parties. With the exception of some modest tweaks, Majority Leader Harry Reid (D-NV) and Minority Leader Mitch McConnell (R-KY) agreed that the rules would remain largely unchanged. Beyond that, though,they shook hands and agreed that for the next several years, neither party will attempt to change the filibuster rules on a majority-vote basis -- what's known as the "Constitutional option."

Under these circumstances, Harkin has given up hope that the Senate will ever reassess itself, and is looking to the courts to step in and shake things up.

"It's clear now that the Senate can not change its rules," Harkin told me in an interview Thursday evening. "It can not."

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Filibuster Reform

Filibuster Reform Effort Falls Short In Senate

Brian Beutler | January 25, 2011, 6:02PM

Senator Tom Udall (D-NM)

An effort to change the Senate's filibuster rules on a majority-vote basis ended Tuesday evening under growing pressure from Democratic and Republican party leaders.

In its place, senators from both parties will soon consider a bipartisan framework, negotiated by Sens. Chuck Schumer (D-NY) and Lamar Alexander (R-TN), which include a handful of more modest reforms.

"We don't have an agreement yet," Alexander told reporters Tuesday afternoon. "We're still having discussions. Several of our members, and several Democratic members still have decisions to make. And when we finish, Senator Reid and Senator McConnell will go to the floor and announce an agreement when there is an agreement.

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Filibuster Reform

Joe Biden: The Key To Filibuster Reform?

Brian Beutler | January 24, 2011, 10:50AM

Vice President Biden

This week, a group of Democratic filibuster reformers will face the first big test of their effort to invoke the "Constitutional Option" -- a process by which members can change the Senate rules by a majority vote. The theory underlying their efforts is that the previous Senate's rules aren't really valid until the new Senate has intentionally adopted them.

That's leading to confusion over whether they're truly on the path to invoking the Constitutional Option -- and that, in turn, means Vice President Joe Biden might have to weigh in and settle the dispute.

Here's the issue under contention.

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Filibuster Reform

Republicans 'Giddy' About One Proposed Filibuster Reform

Brian Beutler | January 7, 2011, 1:26PM

Mitch McConnell (R-KY)

In a bid to attract Republican support for filibuster reform, Democrats led by Sens. Tom Udall (D-NM) and Jeff Merkley have proposed a new rule that would guarantee the minority party the chance to offer three amendments to any legislation.

It may have worked too well. A senior Senate Republican leadership aide says GOP members would be "giddy" if they were given that right.

Here's why. Those amendments would be filibuster-proof -- among the only pieces of legislation in all the Senate to enjoy that privilege -- and would therefore be a recipe for poison pill amendments on both sides.

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Filibuster Reform

How Senate Filibuster Reform Could Invite A Flood Of Poison Pills

Brian Beutler | January 6, 2011, 9:25AM

Harry Reid (D-NV)

A provision in a new package of Senate filibuster reforms meant to protect the minority from the majority's power has supporters both on and off the Hill nervous about its potential to invite poison pills.

One of the GOP's main criticisms of Harry Reid's leadership is that he too often "fills the amendment tree," which essentially eliminates the minority's power to offer amendments. To address that, reform leaders Sens. Tom Udall (D-NM) and Jeff Merkley (D-OR) included a measure in their rules package that would have guaranteed the majority and the minority votes on three germane amendments, regardless of whether the "amendment tree" was otherwise filled.

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Filibuster

How Harry Reid And Mitch McConnell Could Upend Filibuster Reform

Brian Beutler | December 30, 2010, 12:10PM

A handful of junior Democrats, including Sens. Tom Udall (D-NM) and Jeff Merkley (D-OR), have done an impressive job building momentum for a package of modest, but meaningful, changes to the Senate's filibuster rules. But their plan could be completely upended and replaced by even more modest reforms, if Democratic and Republican leaders successfully negotiate a bipartisan rules reform compromise.

In a phone interview with me Wednesday, Udall described negotiations between Senate Majority Leader Harry Reid, Minority Leader Mitch McConnell, and Sens. Chuck Schumer (D-NY) and Lamar Alexander (R-TN) as a "separate track" from his own efforts.

A Senate Democratic aide confirms that those discussions are ongoing, and haven't yet yielded consensus. But if they do, that consensus would serve as a stand-in for Udall's approach, not as an endorsement of it, as previous reporting has suggested.

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Tom Udall

Paging Mr. Smith! How The Senate May Return To The Old-School Filibuster

Brian Beutler | December 30, 2010, 8:30AM

Still from "Mr. Smith Goes To Washington" (1939)

On January 5, 2011 -- the first day of the 112th Congress -- Sen. Tom Udall (D-NM) will touch off a long debate, which he hopes will result in a majority-rules vote on a package of meaningful changes to the Senate rules. After a series of private conversations with Democratic members, he and his allies have settled upon a framework including three distinct reforms designed to unclog the Senate and scale back the minority's power.

The consensus package will aim to put an end to "secret holds" (anonymous filibuster threats) and disallow the minority from blocking debate on an issue altogether. Those two reforms are fairly straightforward. The third is a bit more complex. Udall, along with Sen. Jeff Merkley (D-OR), say there's broad agreement on the idea to force old-school filibusters. If members want to keep debating a bill, they'll have to actually talk. No more lazy filibusters.

But how would that actually work? In an interview Wednesday, Udall explained the ins and outs of that particular proposal.

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Consumer Financial Protection Bureau

Obama Appoints Elizabeth Warren To Advisory Position On Consumer Protection

Brian Beutler | September 17, 2010, 9:49AM

Elizabeth Warren, Chairman of the Congressional Oversight Panel for TARP

The White House made it official this morning, appointing Elizabeth Warren to serve as an adviser to Treasury Secretary Timothy Geithner to help the administration set up the Consumer Financial Protection Bureau.

In a post on the White House blog, Warren writes, "The President asked me, and I enthusiastically agreed, to serve as an Assistant to the President and Special Advisor to the Secretary of the Treasury on the Consumer Financial Protection Bureau."

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Financial Reform

Obama Administration Sided With Scott Brown On Wall Street Bill Loophole

Brian Beutler | June 28, 2010, 4:46PM

President Obama and State Sen. Scott Brown (R-MA)

As the final Wall Street negotiations came to a close last week, the Obama administration quietly sided with Sen. Scott Brown (R-MA) against most Democrats in support of a loophole in one of the key provisions of the financial reform bill.

Several Democratic Hill aides tell TPMDC that the Treasury Department, which wielded tremendous influence over the shape of the legislation, changed its position on the Volcker rule during the final deliberations, endorsing an exemption that will allow banks to invest in outside hedge funds.

"Treasury's official position went from opposed to [the loophole] to supportive," one aide says. "They may have [even] overshot Brown's desires by a bit."

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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.

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Financial Reform

Feingold: I Will Not Support Weak Wall Street Reform

Brian Beutler | June 22, 2010, 3:38PM

Sen. Russell Feingold (D-WI)

Democrats are in hot pursuit of Russ Feingold's vote for Wall Street reform. But in a statement sent my way this afternoon, Feingold says he's told the White House and key congressional leaders that he's still a no unless the bill gets significantly stronger.

"During debate on the financial regulatory reform bill, I made it clear that I would only support a strong bill that can prevent another financial crisis," Feingold's statement reads. "Neither the House bill nor the Senate bill pass that test."

I have spoken to Senate leaders, the Obama administration, and members of the conference committee and made my concerns well known. I opposed deregulating Wall Street and eliminating the protections of the Glass-Steagall Act, a position which put me at odds with many in Washington who supported the very policies that contributed to the financial crisis, and who now support these bills that simply don't get the job done. Without including stronger reforms, we're simply whistling past the graveyard.

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Wall Street

Levin Presses Dems To Buck Big Bank Push For Wall Street Reform Loophole

Brian Beutler | June 22, 2010, 10:49AM

Sen. Carl Levin (D-MI)

In a last-ditch effort to block Wall Street lobbyists from securing another major loophole in financial reform legislation, one of the authors of the so-called Volcker rule is publicly and privately pressuring top negotiators to buck the banks and keep the proposed new rules as strict as possible. He's also casting doubt on those who say the bill won't pass if they don't do as the bankers say.

"There's people [on the conference committee] who favor it," Sen. Carl Levin (D-MI) told TPMDC yesterday evening in a brief interview. "I hope they're not going to accept it."

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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.

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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.

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Financial Reform

Progressives Drive Hard Bargain On Wall Street Bill

Brian Beutler | May 11, 2010, 1:27PM

Sen. Ted Kaufman (D-DE)

At just about every stage of the Senate financial reform process, the changes to the bill have trended towards the left--and that may well be borne out again if Democrats successfully add provision to the bill that will, among other things, ban big banks from using their own capital to engage in market speculation.

The provision is called the Volcker Rule--named after former Fed Chair Paul Volcker who now heads the President Obama's Economic Recovery Advisory Board. Currently, two Democratic senators--Carl Levin (D-MI) and Jeff Merkley (D-OR)--are pushing to add the rule to the Wall Street reform legislation and have built up quite a head of steam. That development was not a sure thing even a few days ago but with the political climate so anti-Wall Street even progressives' failures can turn into successes, which is what sort of happened with the Volcker Rule.

Last week, Sens. Sherrod Brown (D-OH) and Ted Kauffman (D-DE) pushed hard to get their very progressive 'too big to fail' amendment passed. Even though it failed it helped pave the way to enshrining the Volcker rule in the bill.

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Financial Reform

Dems To Demand Answers From McConnell, Cornyn On Meeting With Wall Street Execs

Brian Beutler | April 19, 2010, 2:26PM

Senate Majority Leader Harry Reid

A tough statement from Senate Majority Leader Harry Reid's spokesman Jim Manley sets the tone for a flank of Senate Democrats' messaging this week:

"Senators McConnell and Cornyn should immediately reveal what they discussed earlier this month during secret, closed-door meeting with Wall Street executives in New York City," Manley said, adding:

Years of greed and excess on Wall Street cost 8 million jobs and trillions in wealth for middle-class families and small businesses. Since Republicans appear to be conducting backroom negotiations with these same people who took our economy to the brink of collapse, the public deserves to know what secret deals and carve-outs Republicans are offering Wall Street executives in exchange for their support.

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Public Option

Reid: I'll Try Again For A Public Option This Year

Rachel Slajda | March 19, 2010, 4:58PM

Senate Majority Leader Harry Reid (D-NV)

In a letter sent yesterday, Senate Majority Leader Harry Reid told two senators that he would push for a vote on the public option in "coming months."

The letter to Sens. Bernie Sanders (I-VT) and Jeff Merkley (D-OR) says Reid was "disappointed" the public option did not make it into the final legislation.

"As we have discussed, I will work to ensure that we are able to vote on the public option in the coming months," Reid wrote. His spokesman, Jim Manley, confirmed to TPMDC that the letter came from Reid.

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