Financial regulation measure is stalled in Senate

By Brady Dennis and Shailagh Murray
Washington Post Staff Writer
Thursday, May 20, 2010; A14

Two Senate Democrats broke party ranks Wednesday to block an effort to wrap up debate on landmark legislation to overhaul the nation's financial regulation, potentially delaying passage.

Majority Leader Harry M. Reid (Nev.) called for the vote as part of a push to pass the bill by week's end, but members of both parties balked, arguing that the Senate has yet to consider key amendments.

The tally was 57 to 42 in favor, three votes shy of the 60 needed to overcome a filibuster.

Two Republicans voted in favor of the measure, Sens. Olympia J. Snowe and Susan Collins, both of Maine. Two Democrats, Maria Cantwell (Wash.) and Russell Feingold (Wis.), opposed it. Democrats also suffered from the absence of Sen. Arlen Specter, who had not returned from his loss Tuesday in a Pennsylvania primary.

Reid changed his vote to "no" at the last moment, a procedural maneuver that allows him to call for another vote, which he said he plans to do Thursday afternoon.

The vote followed nearly three weeks of Senate debate over the bill, a stretch virtually unmarred by the procedural antics that have otherwise turned the chamber into a partisan battleground.

Although two Democrats defected, Reid blasted Republicans for the defeat. "They voted to protect the big banks on Wall Street -- these Wall Street firms who led to the loss of 8 million jobs in America and thousands and thousands of homes in foreclosure," he said.

Likewise, Republicans blamed Democrats for producing a bill they said would give the government far too much power and ultimately harm small Main Street businesses.

Wednesday's vote dealt a blow to Democratic leaders who were hoping to move on to other issues, such as a war-funding package. But the financial measure, which would establish a new consumer watchdog and give the government authority to wind down large, failing firms, is still expected to pass in coming days.

The failed vote represented a rare misstep by Reid. He blamed an unnamed GOP lawmaker for flipping under pressure. "I know how to count votes," the majority leader told reporters late Wednesday. "And I'm not going to be giving any names and verses, but a senator broke his word with me."

That senator appeared to be Scott Brown (R-Mass.), who said in a statement that he is concerned that the legislation would harm insurance companies and certain banks in his state. "I cannot in good conscience vote to end debate on a flawed bill," he said. But he added, "My vote today is not a vote against financial regulatory reform. I believe we need to enact measures that will prevent another catastrophic collapse of our financial system."

Lawmakers on both sides of the aisle have shown flashes of anger recently as they struggled to get amendments considered on the Senate floor. More than 375 proposed amendments to the bill have been filed, but far fewer have received a vote.

One aggrieved senator was Cantwell. Before the vote Wednesday, she sat firmly planted in her seat on the Senate floor, silent and stern.

In particular, she was upset that party leaders had not allowed a vote to change a section of the bill that concerns financial derivatives. Cantwell said she is seeking to close loopholes that remain in the legislation. For instance, she wants tougher sanctions for firms that enter into deals that are not approved by central clearinghouses.

Cantwell also has teamed with Sen. John McCain (R-Ariz.) on a proposal to reinstate the Depression-era Glass-Steagall law, repealed in 1999, that separated commercial from investment banking. That amendment also hasn't had a vote.

Cantwell was visibly irritated during the vote as Democratic leaders approached her several times. At one point, she could be heard saying to Reid, "Jesus Christ, Harry."

Feingold said he was not satisfied that the legislation would prevent another financial meltdown. "Ending debate on the bill is finishing before the job is done," he said in a statement.

Democrats said they were hopeful that they would win back at least one Democrat who voted against the measure on Wednesday -- most likely Cantwell. Party leaders expect other Republicans, including Brown and Sen. Charles E. Grassley (R-Iowa), both of whom have voted with Democrats on key amendments, to join Snowe and Collins in supporting the bill.

After the vote, the Senate continued debating amendments late into the evening. Reid canceled his plans to attend a state dinner at the White House.

Senators voted down an amendment by Sen. Sheldon Whitehouse (D-R.I.) that would have forced big credit-card lenders to abide by state laws governing interest rate limits. The provision, rejected 60 to 35, had won praise from consumer advocates but encountered vehement opposition from the banking industry.

© 2010 The Washington Post Company