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President Urges Democrats to Make Hard Push on Financial Regulation

Posted on 25 Mar 2010

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President Obama and Democratic lawmakers moved Wednesday to accelerate their efforts at overhauling the nation's financial regulation, seeking to exploit divisions among Republicans over how much to compromise on a landmark bill now awaiting Senate action.

Fresh off his victory this week on health care, Obama urged the Democratic sponsors of financial legislation in the Senate and House to press ahead with or without Republican backing, according to sources familiar with the 45-minute White House strategy session. The president told them the Democrats have the upper hand and should not give too much ground.

The chairman of the Senate banking committee, Christopher J. Dodd (D-Conn.), said after the meeting that he would seek final Senate passage of the bill a few weeks after Easter.

Obvious rifts

Even as Obama was preparing to receive his congressional allies, the fissures among Republican lawmakers over the bill surfaced as never before, with Sen. Bob Corker (R-Tenn.), who has actively negotiated with Dodd, telling the U.S. Chamber of Commerce that it would be tough to keep all 41 GOP senators in opposition. Corker predicted the bill would ultimately pass.

"I think it's going to be very, very difficult -- very difficult -- to get 41 members to hold, especially if many of the provisions in this bill address concerns that everyday people on Main Street have," he said in a speech.

Corker, a freshman, said the Republicans on the banking committee made a "very, very large mistake" and a "major strategic error" this week when they withdrew hundreds of amendments they originally had offered to Dodd's bill and instead opposed it without debate. The measure passed along party lines, setting up a battle over the details of the legislation as it heads to the Senate floor.

"It is going to be far more difficult to end up with a financial regulatory bill that seeks the middle ground and will stand the test of time," Corker said, adding that he thought it was still possible.

He also took an unusually public swipe at Sen. Richard C. Shelby (Ala.), the ranking Republican on the banking committee, faulting him for failing to engage more seriously with the Democrats in the past. "We could have already had a bipartisan bill passed," Corker complained. "It would have been better, in fairness, had Senator Shelby been negotiating a bipartisan bill last September, October, November. I think we could have already had a bipartisan bill passed if that did occur. It didn't occur."

Instead, Corker said Republicans now confront Democratic officials who "are emboldened, the testosterone and other juices are flowing" after the enactment of the health-care bill.

Sen. Judd Gregg (R-N.H), who also addressed the Chamber, said that an earlier version of the regulatory bill that passed the House in December "is very detrimental to the financial sector" and that Dodd's current draft could be "equally detrimental." Speaking to reporters afterward, however, Gregg said that he, too, was "100 percent" confident that some version of a financial overhaul bill would pass the Senate this year.

The regulatory reform legislation would revamp the rules that have governed the financial industry for decades. There is widespread agreement among Democrats and Republicans on the need to give federal officials the power to seize the biggest financial firms if they face collapse and to monitor emerging threats to the financial system. But key differences remain over the details of these policies as well as over how much authority to invest in a new regulatory agency designed to protect ordinary Americans from abusive and deceptive lending practices.

The Senate legislation would also bring exotic financial derivatives under government oversight for the first time and merge the Office of Thrift Supervision into a new national banking regulator. Meanwhile, the Federal Reserve would be stripped of its supervisory responsibilities over all but a few dozen big banks.