Senate passes financial reform; Grassley tries to have it both ways

The U.S. Senate passed the Wall Street reform bill today by a 59 to 39 vote (roll call here). The vote was mostly along party lines, but Democrats Russ Feingold of Wisconsin and Maria Cantwell or Washington voted no, while Republicans Olympia Snowe and Susan Collins of Maine, Scott Brown of Massachusetts and Iowa’s own Chuck Grassley voted yes. Earlier today, a cloture motion to end debate on the bill passed 60 to 40. Only three Republicans voted for the cloture motion (Snowe, Collins and Brown). In other words, Grassley voted against letting the bill advance before he voted for it.

Grassley typically wouldn’t be the only conservative Republican voting with a handful of New England moderates. Like Howie Klein, I wonder whether Grassley was concerned about this bill becoming an election issue. Roxanne Conlin’s campaign blasted Grassley yesterday for joining the Republican filibuster of the bill.

The financial reform now goes to a formal conference committee to reconcile differences between the House and Senate versions. Annie Lowrey discussed that process and some of the contentious issues here. I’m not hopeful about the final product.

Lots of amendments to more strongly regulate the financial industry bill didn’t get a vote in the Senate, including Tom Harkin’s proposed limit on ATM fees. Jeff Merkley of Oregon and Carl Levin of Michigan were unable to get a vote on their amendment to reinstate the “Volcker rule” (banning proprietary trading by banks). There was a small silver lining in that opposition to Merkley-Levin scuttled a horrible idea. Earlier this week Merkley and Levin attached their amendment to a terrible Republican amendment, which would “[exempt] auto dealers from new consumer protection laws, even though auto loans are the biggest instances of financial malfeasance against consumers, especially military personnel.” Today Senator Sam Brownback of Kansas withdrew his auto dealer amendment in order to prevent Merkley-Levin from getting a vote.

UPDATE: Statements from Harkin, Grassley and Conlin are after the jump. Harkin and Grassley both called the bill “a step in the right direction” even as they lamented its flaws. Harkin lamented that several specific proposals were not adopted or considered, while Grassley called attention to his amendments that became part of the bill. Conlin praised Grassley’s vote for the reform bill and claimed that grassroots efforts “turned up the heat” on Grassley, prompting him to reverse “his five previous votes to block debate on Wall Street reform.”

Statement issued by Tom Harkin, May 20:

“I voted for this measure because it is a step in the right direction. This bill will create a strong consumer financial protection bureau that will put a stop to a whole range of predatory financial practices targeting ordinary Americans.

“I am particularly pleased that language requiring commercial banks to spin off their derivatives operations remained in the bill in its original form as reported from the Senate Agriculture Committee. This is a very important part of the bill and I hope it remains in the conference-reported bill.

“I am disappointed, however, that other amendments in line with Chairman Lincoln’s provision were not included. In particular, Senator Cantwell’s proposal to reinstate the Glass-Steagall Act was not even considered. I was one of eight senators to vote against financial deregulation in 1999 that did away with Glass-Steagall. Reconsidering this issue had a place in this debate. Also, Senators Brown and Kaufman offered an amendment that would have dramatically reduced the size of the largest financial institutions. Unfortunately, the amendment was defeated.

“The problem in the financial sector, as with so many areas of our economy, is that the ground rules and oversight have been lax. Too many in the financial industry put profits ahead of people. As a direct consequence, tens of millions of ordinary Americans have lost their jobs, their homes, and, their livelihoods. This legislation will help restore some balance to our financial sector.”

If Senator Harkin was really upset about the amendments that weren’t considered, why didn’t he join Feingold and Cantwell in voting against ending debate on this bill? I doubt the consumer protection bureau will have much power, and I predict that the conference committee will weaken Lincoln’s language on derivatives.

Statement issued by Chuck Grassley, May 20:

“There’s no question this bill has flaws, but a message needs to be sent to Wall Street that business-as-usual is over.  After what happened leading up to the 2008 financial crisis, something’s got to change.  Taxpayers need protection.  Big banks and financial institutions took advantage at the expense of average Americans, and the system let them get away with it.  This bill takes a step in the direction of trying to fix things.  It starts to open up the Fed.  It puts the massive derivatives market in the light of day.  Other reform is needed, too, starting with Fannie and Freddie.  It’s a matter of transparency and accountability.”

Background Information:

Grassley offered a number of amendments to the bill during Senate debate to increase transparency and accountability in the bureaucracy and industry, including the Federal Reserve, the Securities and Exchange Commission, credit-rating agencies and Congress itself.  He won passage of his amendment to establish for employees of credit-rating agencies the same whistleblower protections he secured for corporate employees after Enron, and the Senate approved an amendment he cosponsored to remove the conflicts of interest that compromise assessments by credit-rating agencies.  Grassley also won passage of his amendment to strengthen the hand of Inspectors General throughout the federal bureaucracy to fight fraud, abuse and mismanagement.  Grassley’s IG amendment was adopted by a vote of 75 to 21, and responded to language in the original bill which would have undermined the independence of Inspectors General at five federal agencies dealing with the financial system.

Statement issued by Roxanne Conlin, May 20:

“We have turned up the heat on Senator Grassley.  Because of our efforts Senator Grassley reversed his five previous votes to block debate on Wall Street reform and supported the final measure. I am so proud of our grassroots supporters who mobilized online and across the state and reached out to Senator Grassley to get him to switch his position.  While this does not make amends for Senator Grassley’s $700 billion bailout of Wall Street or the fact that he created the atmosphere that allowed for recklessness and greed to wreak havoc on nation’s economic system, I am pleased with his vote today.”

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