After voting three times this week to block debate, GOP senators decided to reverse course and attempt to reshape the bill through the amendment process. The change in tactics came after Senate banking committee Chairman Christopher J. Dodd (D-Conn.) and the ranking Republican on the panel, Sen. Richard C. Shelby (Ala.), announced that they had again reached an impasse in their efforts to reach a bipartisan compromise.
Democrats had embraced the GOP filibuster as an opportunity to portray Republicans as defenders of powerful special interests, in particular major banks and investment houses. Senate Majority Leader Harry M. Reid (D-Nev.) had threatened to keep the Senate in session overnight Wednesday to reap maximum political benefits.
Speaking at a rally in Quincy, Ill., an economically depressed Mississippi River town, President Obama hailed the bill's advancement and assured an exuberant audience of 2,300 people that the financial sector would face tough new restrictions. "It was one of those heads, they [win] -- tails, you lose" situations on Wall Street, Obama said. "What was working for them was not working for ordinary Americans."
After Shelby and Dodd announced their impasse, Reid and Senate Minority Leader Mitch McConnell (R-Ky.) delivered back-to-back Senate floor statements, agreeing that proceedings would begin at 12:15 p.m. Thursday. Reid said he would allow votes on numerous GOP amendments, a pledge that some Republican senators had sought before agreeing to lift their objections.
"It is my hope that the majority's avowed interest in improving this legislation on the Senate floor is genuine and the partisan gamesmanship is over," McConnell said.
Although Democrats have scaled a major procedural hurdle, final passage of the massive bill is by no means guaranteed. Sen. Ben Nelson (D-Neb.) supported the Republican filibuster on all three votes, and if Democrats decide they can't or won't address his concerns, they must win at least two GOP converts to push the legislation across the finish line.
One likely target will be Sen. Olympia J. Snowe (R-Maine), who has identified only a few areas of concerns and has said she strongly supports the bill's overall objective of curbing Wall Street abuses. But she said she would vote against the bill unless she is convinced it will do no harm to small businesses and the community banks that lend to them.
Shelby and Dodd agreed that they had made headway on the key issue of prohibiting taxpayer bailouts for failing financial firms. In particular, Dodd agreed to drop a proposed $50 billion fund paid for by the financial industry that could be used to shut down failing firms, among other assurances. Republicans had argued against the measure, saying that amounted to a permanent bailout fund. Dodd also agreed to ensure that Congress would have a say in any federal guarantee program and that such programs could be used only in real emergencies and only by solvent firms, aides said.
Still, the two never reached reach agreement on the creation of a consumer financial protection bureau, a powerful entity that would monitor mortgages, credit cards and other consumer loans.
Shelby also expressed reservations about the sweeping new rules to govern the derivatives market in the Dodd bill. He said that although he supports reining in the "casino-like atmosphere on Wall Street," he worried that the derivatives provisions in the bill would "have far-reaching and devastating effects" on Main Street businesses. Dodd's bill would impose tough restrictions on the derivatives trade, including provisions that would force big banks to spin off their derivatives desks and requiring that nearly all deals be traded on open exchanges and approved by entities called clearinghouses.
It was barely a month ago that members of the Senate Banking Committee passed Dodd's bill on a quick party-line vote. GOP lawmakers had crafted hundreds of amendments for the committee to consider but decided to forgo proposing any of them, in hopes of negotiating a deal behind closed doors before the bill hit the Senate floor.
That didn't work out as planned. Asked Wednesday whether he was comfortable moving to the floor under the current agreement, Shelby expressed disappointment. "I would be more comfortable if we had reached a comprehensive agreement," he said. Democrats expect the debate to last through the second week of May.
Despite assurances from Democrats that they will consider GOP amendments to the bill, Republican lawmakers and their aides remained fearful Wednesday that Democrats will try to shut them out of the process. Without a deal in hand, Republicans also will have to fend off amendments from liberals that threaten to further shape the bill in ways they might oppose.