Two controversial amendments await Senate vote
Thursday, May 20, 2010; 9:56 PM
Passage of far-reaching Senate legislation to remake the nation's system of financial regulation nearly hit a roadblock on Thursday evening.
As Senate Democrats sought to steer the massive bill toward a final vote, lawmakers still had to contend with two controversial amendments that had yet to get a vote during three weeks of Senate debate.
The first, from Sen. Sam Brownback (R-Kan.), would exempt auto dealers from oversight by the new consumer financial protection bureau, and a second measure pushed by Sens. Carl M. Levin (D-Mich.) and Jeff Merkley (D-Ore.) that would ban banks from making speculative investments using their own capital, known as proprietary trading, and from owning hedge funds or private-equity funds.
The fate of the two controversial measures became linked this week, as Levin and Merkley used a procedural maneuver to attach their measure to Brownback's.
The administration and Sen. Christopher J. Dodd (D-Conn.), the architect of the Senate's overhaul bill, have supported the Levin-Merkley amendment but hotly opposed Brownback's attempt to carve out auto dealers. But because the Levin-Merkley amendment could succeed only if Brownback's measure also succeeds, officials had said they would prefer that both amendments fail, denying the auto dealers an exemption.
"We support the Merkley-Levin amendment," an administration official said Thursday, "but we must not sacrifice protections for American families against unscrupulous auto lending practices to pass Merkley-Levin as attached to the Brownback amendment when the Dodd bill already provides strong protection against excessive risk-taking by banks."
Late Thursday, a deal emerged that helped pave the way for the final vote on the financial overhaul -- which passed 59-39. Under the agreement, there would be no vote on Brownback's amendment, and hence no vote on the Merkley-Levin provision, either. But the Senate would plan to hold a procedural vote Monday to instruct members of the House-Senate conference to consider exempting auto dealers when hammering out the difference between the two bills.
However, there would be no such suggestion on Levin-Merkley. The two Democrats marched to the Senate press gallery late Thursday to accuse Republicans of pulling the amendment at the expense of auto dealers to protect big banks.
Levin said that if Republicans indeed withdrew Brownback's auto amendment in order to kill the proprietary trading provision, "that would be an extraordinary, powerful statement about the power of Wall Street."
Added Merkley: "This is not what the American public deserves. They deserve a vote on this issue . . . those who want to vote against it don't want to have a recorded vote against it."
Republican aides said Brownback had wanted a clean vote on the auto dealer exemption, but could not have gotten it with the other amendment attached to it.
A version of the proprietary trading restrictions exists in the current Dodd bill. While the Merkley-Levin amendment would have mandated new rules, Dodd's bill calls for a study on the issue, after which time regulators can decide whether the restrictions should be implemented.
For months, auto dealers have undertaken a furious lobbying campaign to escape the reach of the new consumer watchdog, arguing that existing regulators already have power to crack down on abusive practices and that new rules would simply punish small business owners for the sins of big banks and reckless Wall Street traders.
Auto dealers argued that while they often help facilitate financing for buyers, they act primarily as a intermediary between lenders and consumers and generally don't use their own money to originate loans. Adding new rules or forcing them to submit to regular examinations by federal officials, they insisted, would increase the price of doing business, result in higher costs to consumers and potentially discourage dealers from offering financing options altogether.
Auto dealers successfully won an exemption when the House passed its version of the financial regulatory overhaul in December. Rep. John Campbell (R-Calif.), a former auto dealer, proposed that carve-out and garnered bipartisan support in committee, with 19 Democrats backing it.