Top Senate Republican blasts Democrats' financial regulation bill
Wednesday, April 14, 2010
The Senate's top Republican insisted on Tuesday that Democratic proposals to rewrite financial regulations would perpetuate the bailout of Wall Street firms, a criticism that the Obama administration quickly rejected.
"The fact is, this bill wouldn't solve the problems that led to the financial crisis. It would make them worse," Senate Minority Leader Mitch McConnell (R-Ky.) said of legislation that recently passed the chamber's banking committee on a party-line vote. "This bill not only allows for taxpayer-funded bailouts of Wall Street banks; it institutionalizes them."
McConnell's remarks offered a glimpse of how Republicans might frame their opposition to the far-reaching legislation as it heads toward the Senate floor, even as members of both parties continue to work behind the scenes on a potential bipartisan agreement.
Consumer groups, taking note of the minority leader's recent trip to New York, quickly sent e-mails with headlines such as, "McConnell slams financial reform bill after meeting with hedge fund managers and other Wall Street elites."
McConnell's critique also brought a swift response from Obama administration officials, who argued that he was mischaracterizing the bill authored by banking committee Chairman Christopher J. Dodd (D-Conn.) and said that the measure would eliminate taxpayers' exposure to financial failures. "There are no more taxpayer-funded bailouts, period," said Deputy Treasury Secretary Neal Wolin. "Insolvent firms would go away. . . . The industry bears the financial burden, and the taxpayer bears none of it."
The White House deputy communications director, Jen Psaki, wrote on a White House blog Tuesday that under Dodd's bill, "taxpayers will never be asked to foot the bill for Wall Street's irresponsibility." She repeated a refrain that advocates have used with increasing regularity: "There's a clear choice in this debate: to stand with American families or stand on the side of the big Wall Street banks and their lobbyists who are defending the status quo."
One question is whether McConnell can keep GOP senators unified in opposition to the current legislation; a handful of Republicans continue to express optimism about reaching a compromise with Dodd.
"I continue to work with Senator Dodd. Our staffs are working as we speak," said Sen. Richard C. Shelby (Ala.), the ranking Republican on the banking committee, who also has criticized the current proposal. "We can get a good bill if they will meet us halfway -- and they haven't yet."
Several key issues remain unresolved, including how best to protect consumers from lending abuses; how to wind down large, troubled financial firms; and how to oversee the vast, opaque market for financial derivatives.
Illustrating how tenuous each element remains, a bipartisan effort to shape derivatives oversight stalled this week among leaders on the Senate Agriculture Committee. Sen. Saxby Chambliss (Ga.), the ranking Republican, accused administration officials of being "intent on making this a partisan issue without Republican input." Meanwhile, Chairman Blanche Lincoln (D-Ark.) vowed to press forward this week with legislation that "will bring 100 percent transparency and accountability to Wall Street" and will "go further than any other congressional or administration proposal to prevent future bailouts."
President Obama, for his part, plans to hold a meeting Wednesday with Republican and Democratic leaders in both chambers of Congress about the proposed financial regulatory overhaul.