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With 2 Republicans, financial overhaul bill moves toward approval

Senate Majority Leader Harry Reid of Nev., looks at signed petition papers on a table in support of a strong financial reform, during a news conference discussing Wall Street accountability legislation, Wednesday, May 5, 2010, on Capitol Hill in Washington. (AP Photo/Manuel Balce Ceneta)
Senate Majority Leader Harry Reid of Nev., looks at signed petition papers on a table in support of a strong financial reform, during a news conference discussing Wall Street accountability legislation, Wednesday, May 5, 2010, on Capitol Hill in Washington. (AP Photo/Manuel Balce Ceneta) (Manuel Balce Ceneta - AP)

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Ahead of Thursday's vote on the measure, President Obama excoriated Republicans for trying to "gut consumer protections" and vowed that he would "not allow amendments like this one written by Wall Street's lobbyists to pass for reform." He and other Democrats called the GOP proposal "worse than the status quo."

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Sanders curtails proposal

At the same time, Sanders' push to expand transparency at the Fed had gained momentum in recent days, even as Bernanke and other administration officials expressed caution. A top Treasury official said Thursday afternoon that the administration would oppose the amendment as written, and Bernanke warned that it could threaten the Fed's independence on monetary policy, possibly hindering economic stability and job creation.

"At a time when our entire financial system almost collapsed, we cannot let the Fed operate in secrecy any longer," Sanders insisted Thursday.

Ultimately, he altered his amendment in an effort to assuage those concerns. The modified language would limit GAO investigators to a single audit of the Fed's emergency lending programs since Dec. 1, 2007, eliminating the possibility of repeated audits. In addition, Sanders would give Fed officials more time to disclose details about the central bank's role in the bailout of Wall Street firms at the height of the financial crisis, moving the deadline back to December.

The changes softened opposition to Sanders' measure, and by late Thursday Dodd and the administration offered support for the modified amendment.

The Senate also began consideration of a Republican amendment seeking to dissolve the government conservatorship of mortgage giants Fannie Mae and Freddie Mac. The Dodd legislation doesn't deal with Fannie and Freddie, though administration officials have said they plan to tackle the problem over the coming year. Sen. John McCain (R-Ariz.) said on the Senate floor Thursday that trying to reform the financial system without fixing Fannie and Freddie "is like declaring war on terror and ignoring al-Qaeda."

The Senate will continue to debate the massive financial bill Friday, but no further votes are expected until Tuesday.


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