Obama urges Democrats to make hard push on financial regulation

By David Cho and Brady Dennis
Washington Post Staff Writer
Thursday, March 25, 2010; A14

President Obama and Democratic lawmakers moved Wednesday to accelerate their efforts at overhauling the nation's financial regulation, seeking to exploit divisions among Republicans over how much to compromise on a landmark bill now awaiting Senate action.

Fresh off his victory this week on health care, Obama urged the Democratic sponsors of financial legislation in the Senate and House to press ahead with or without Republican backing, according to sources familiar with the 45-minute White House strategy session. The president told them the Democrats have the upper hand and should not give too much ground.

The chairman of the Senate banking committee, Christopher J. Dodd (D-Conn.), said after the meeting that he would seek final Senate passage of the bill a few weeks after Easter.

Obvious rifts

Even as Obama was preparing to receive his congressional allies, the fissures among Republican lawmakers over the bill surfaced as never before, with Sen. Bob Corker (R-Tenn.), who has actively negotiated with Dodd, telling the U.S. Chamber of Commerce that it would be tough to keep all 41 GOP senators in opposition. Corker predicted the bill would ultimately pass.

"I think it's going to be very, very difficult -- very difficult -- to get 41 members to hold, especially if many of the provisions in this bill address concerns that everyday people on Main Street have," he said in a speech.

Corker, a freshman, said the Republicans on the banking committee made a "very, very large mistake" and a "major strategic error" this week when they withdrew hundreds of amendments they originally had offered to Dodd's bill and instead opposed it without debate. The measure passed along party lines, setting up a battle over the details of the legislation as it heads to the Senate floor.

"It is going to be far more difficult to end up with a financial regulatory bill that seeks the middle ground and will stand the test of time," Corker said, adding that he thought it was still possible.

He also took an unusually public swipe at Sen. Richard C. Shelby (Ala.), the ranking Republican on the banking committee, faulting him for failing to engage more seriously with the Democrats in the past. "We could have already had a bipartisan bill passed," Corker complained. "It would have been better, in fairness, had Senator Shelby been negotiating a bipartisan bill last September, October, November. I think we could have already had a bipartisan bill passed if that did occur. It didn't occur."

Instead, Corker said Republicans now confront Democratic officials who "are emboldened, the testosterone and other juices are flowing" after the enactment of the health-care bill.

Sen. Judd Gregg (R-N.H), who also addressed the Chamber, said that an earlier version of the regulatory bill that passed the House in December "is very detrimental to the financial sector" and that Dodd's current draft could be "equally detrimental." Speaking to reporters afterward, however, Gregg said that he, too, was "100 percent" confident that some version of a financial overhaul bill would pass the Senate this year.

The regulatory reform legislation would revamp the rules that have governed the financial industry for decades. There is widespread agreement among Democrats and Republicans on the need to give federal officials the power to seize the biggest financial firms if they face collapse and to monitor emerging threats to the financial system. But key differences remain over the details of these policies as well as over how much authority to invest in a new regulatory agency designed to protect ordinary Americans from abusive and deceptive lending practices.

The Senate legislation would also bring exotic financial derivatives under government oversight for the first time and merge the Office of Thrift Supervision into a new national banking regulator. Meanwhile, the Federal Reserve would be stripped of its supervisory responsibilities over all but a few dozen big banks.

'Give and take'

On Wednesday afternoon, Shelby convened the Republican members of the banking committee in an effort to restore a common front. Afterward, Shelby said the lawmakers had spoken candidly "about where we are and where we want to go." He acknowledged there were "differences of opinion" but said the primary challenge would be finding common ground with Democrats. Shelby said he and Dodd planned to meet later in the day.

Asked by reporters if he thought he could agree to the timetable set by Dodd, Shelby said, "I'd like to, but it's going to take some give and take on both sides."

Dodd has spent months negotiating with Republicans over the details of these elements. Talks broke off several times, first with Shelby and then with Corker. Dodd finally decided to forge ahead without reaching a deal with Republicans on a few of the most contentious issues.

Lobbyists who have been in contact with Shelby's office said the veteran politician may be waiting until the last possible moment -- when Democrats may be the most eager to get a bill passed -- before unveiling a list of GOP demands.

Republicans have the 41 votes required to block the Senate bill with a filibuster. But administration officials said this could make the Republicans look as though they are standing in the way of a bill designed to rein in Wall Street, which has become the target of widespread anger among Americans.

In its public statements Wednesday, the administration tried to keep the heat on GOP senators.

"This is a choice for any member who is considering opposing the bill -- either they want to stand with American families who have struggled as a result of the financial crisis or with the financial system that is not only broken, but has returned to some of the same behavior that caused the crisis in the first place," said White House spokesman Jennifer Psaki.

And in a speech to the Chamber of Commerce, Deputy Treasury Secretary Neal S. Wolin launched the latest salvo against financial lobbyists who oppose the bill. He accused the group that had invited him to lunch of being "backward" and dishonest.

"Despite the urgent and undeniable need for reform, the Chamber of Commerce has launched a $3 million advertising campaign against it," he said. "That campaign is not designed to improve the House and Senate bills. It is designed to defeat them."

The Chamber shot back in a press statement, accusing Wolin of "political grandstanding" and distorting facts, particularly when he discussed the creation of a new consumer regulator. R. Bruce Josten, the Chamber's executive vice president, criticized the Senate bill for giving the consumer regulator "very broad and unchecked government authority to write its own rules without oversight by Congress, the President, or the Federal Reserve."

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