Suspicion greets Democrat's stated reason for opposing financial overhaul bill
Thursday, April 29, 2010
For the third day in a row, Sen. Ben Nelson (D-Neb.) broke with his Democratic colleagues Wednesday and voted to block the start of formal Senate debate on a far-reaching bill to overhaul financial regulations.
Nelson has repeatedly said his objections center on the impact the legislation could have on businesses beyond Wall Street.
But there has been widespread skepticism on Capitol Hill about Nelson's public explanation for his dissent, and the bill's sponsor, Sen. Christopher J. Dodd (D-Conn.), added further doubts by saying that Nelson raised concerns about a provision concerning exotic financial instruments called derivatives.
That provision has drawn fire from Berkshire Hathaway, the Omaha-based company of billionaire Warren Buffett, and Nelson's biggest donor over the past decade. (Buffett is a director of The Washington Post Co.)
Berkshire Hathaway or individuals associated with the company have contributed $75,550 to Nelson's campaign war chest since 2000, according to records filed through the end of March and analyzed by OpenSecrets.org, a project of the Center for Responsive Politics. One Berkshire company, MidAmerican Energy, also contributed $9,600 to Nelson's Nebraska Leadership PAC.
The Dodd bill would require most derivative contracts to be traded on open exchanges and approved by separate entities called clearinghouses. In addition, companies trading in derivatives would have to post certain collateral in case one party to the contract defaults.
A version of the measure initially proposed by Sen. Blanche Lincoln (D-Ark.) would have exempted owners of existing derivatives contracts from having to post additional collateral. This exemption would have kept firms from potentially tying up substantial amounts of money that could be put to other uses.
A Senate aide said Nelson, a member of the Agriculture Committee, which Lincoln chairs, had sought the exemption when committee members were drafting the bill. "Senator Nelson did ask for us to make a change. We were trying to accommodate him," said the aide, who was not authorized to speak publicly.
The aide said Berkshire Hathaway and "a lot of other parties" had lobbied for the exemption.
But the exemption was dropped from a final version of the legislation that merged derivatives bills passed by the agriculture and banking committees.
In a statement Wednesday, Nelson said an "important principle" was at stake in his insistence on the exemption. "Big government should not reach back and rewrite existing contracts between American companies executed in good faith that help our economy grow. It's unconstitutional. Not only that, it's just wrong," he said.
At the same time, Nelson acknowledged that Berkshire Hathaway had contacted him to say it would be "adversely affected" by the new derivatives legislation. In turn, Nelson said he raised those concerns with the Agriculture Committee.
Nelson's most recent financial disclosure form, filed last year, shows that he and his wife owned between $1.5 million and $6 million in Berkshire stock in 2008 -- by far Nelson's largest listed asset.