Dodd, Shelby hit impasse, imperiling financial system legislation
Saturday, February 6, 2010
The divide between Republicans and Democrats over how to protect borrowers from abusive lenders continues to jeopardize the prospects for legislation to overhaul the nation's financial regulatory system -- a top priority for President Obama.
Sen. Christopher J. Dodd (D-Conn.), chairman of the Senate banking committee, said Friday that he and the committee's ranking Republican, Sen. Richard C. Shelby (Ala.), had once again "reached an impasse" in negotiations over the bill. But Dodd said he would press on.
"While I still hope we will ultimately have a consensus package, it is time to move the process forward," Dodd said in a statement. "I have instructed my staff to begin drafting legislation to present to the committee later this month."
Dodd and his fellow Democrats could advance the bill from the banking committee to the Senate floor. But with the recent election of Sen. Scott Brown (R-Mass.), they have lost the ability to pass legislation without some Republican support.
The latest setback comes more than seven months after the Obama administration unveiled its blueprint for reforming financial regulation. In December, the House passed its own version, largely modeled on the administration plan, without a single Republican vote.
The key outstanding issue is consumer protection. Dodd and the administration want to create an autonomous new regulator with the power to write and enforce rules aimed at protecting consumers of mortgages, credit cards and other financial products. Shelby and other Republicans argue that the same federal agency assigned to supervise the financial health of lenders should also oversee consumer protection.
"I fully support enhancing both consumer protection and safety and soundness regulation," Shelby said in a statement Friday. "I will not support a bill that enhances one at the expense of the other, however."
Dodd and Shelby broke off talks about reform legislation in November, largely because of the consumer protection issue. But the two men and their staffs soon returned to the bargaining table. In a joint statement just before Christmas, Dodd and Shelby cited their common goals, spoke of "meaningful progress" and said they hoped "to resolve the remaining issues before we reconvene in January."
January came and went, and the two men continued to talk.
At a meeting late Thursday afternoon, congressional aides said, Shelby assured Dodd that he wanted to find consensus. But as their two staffs continued talks into the evening, it became clear that significant differences remained, and neither side offered to give more ground.
Dodd said Friday that he hoped to begin the formal process of piecing together a bill by the end of the month. He said it would include the compromises reached by several bipartisan pairs of senators, who have been working on such issues as executive pay and oversight of derivatives.
Dodd's announcement drew support from moderate Democrats on his committee, including some who had expressed reservations in November. "Sen. [Jon] Tester believes creating jobs and cleaning up Wall Street is a non-partisan goal, but doing nothing is not an option," said Aaron Murphy, a spokesman for the Montana Democrat.
Democrats remained optimistic that they might win some Republican votes. Aides point to Dodd's success last year in convincing Shelby to support legislation cracking down on the credit card industry.
Dodd struggled to get that bill out of the banking committee over the opposition of every Republican and one Democrat, Tim Johnson of South Dakota. But once the bill reached the Senate floor, Dodd and Shelby hammered out a compromise.
The pending regulatory overhaul, however, is far broader and more complex. The political climate also has changed, as Republicans have consistently opposed the administration's legislative agenda. Still, key Republicans, such as Shelby and Sen. Bob Corker (Tenn.), said Friday that they remain willing to work with Dodd on a final bill.