WASHINGTON – Fresh off a confrontation with Goldman Sachs executives, Democrats are mounting another effort to police the freewheeling Wall Street ways that they say helped bring on the worst recession since the Great Depression.
Outnumbered Senate Republicans have held together for two days, twice blocking the start of debate on rewriting financial regulations, in hopes of negotiating changes in the bill. In the protracted fight, Republicans have cast the Democrats' proposal as a perpetuation of taxpayer bailouts — a hot-button issue — and accused Democrats of writing an overambitious bill that will hurt small businesses.
Democrats are pressing ahead, hoping that Republican resistance is wearing thin and that the scrutiny of Goldman's actions in the market will stiffen public sentiment against the excesses of financial institutions. Democrats scheduled another vote for Wednesday to sustain pressure on the GOP in the expectation that some incremental changes to the bill ultimately would force several Republicans to relent and back the legislation.
Few doubt that the Senate will pass an overhaul of financial regulations in an attempt to prevent a recurrence of the crisis that nearly caused a Wall Street collapse in 2008. But Republicans want their imprint on the bill. And bankers appear to want them to succeed as well.
If campaign contributions are any barometer, large Wall Street institutions approve of what Senate Republicans have been doing to alter the regulatory regime envisioned by the Obama administration and its Democratic allies.
The political action committee of Bank of America, for instance, has contributed 57 percent of its $336,000 in 2009-10 donations to Republicans, according to the Center for Responsive Politics. In the 2007-08 cycle, 53 percent of the bank's PAC contributions went to Democrats.
A spot check of contributions by The Associated Press showed that Goldman Sachs' PAC, which contributed predominantly to Democrats between 2007 and 2009, shifted to Republicans in March, contributing $167,500 to Republican members of Congress and their political committees and $117,000 to Democrats. Similar patterns emerged for JPMorgan Chase and Morgan Stanley, whose PACs both shifted to Republicans last month.
Testifying before a Senate investigative panel on Tuesday, Goldman CEO Lloyd Blankfein said he generally supported the pending Democratic bill but said "there are details of it that I think I'm less sure of."
Senate Banking Committee Chairman Christopher Dodd, D-Conn., and the committee's top Republican, Alabama Sen. Richard Shelby, have been conducting on-and-off negotiations for months but have not arrived at a compromise. Dodd incorporated some Republican proposals into his bill and appeared ready to accept new alterations that addressed Republican claims that the bill could still result in government bailouts.
But Shelby also was seeking changes in the bill's consumer protection provisions — a key feature and a priority for President Barack Obama. Dodd on Tuesday said that if Republicans wanted to change his consumer measures, they should do so by amendment in the Senate.
"We're not going to write this whole bill between two senators," Dodd said.
The Republican tactics in the Senate carry risks for the party. The public is angry at Wall Street, and Democrats have taken the opportunity to charge Republicans with doing Wall Street's bidding.
On NBC's "Today" show Wednesday, Sen. Carl Levin, D-Mich., said, "It is totally inconsistent to be arguing that there ought to be financial reform, and after all these months of reviews, studies, hearings, not allow a bill to come to the floor."
Sen. Susan Collins, R-Maine, responded that Republicans are trying to strengthen the bill — for example, with "better protections against taxpayer-funded bailouts."
Republicans on Tuesday floated a 20-page summary of a GOP alternative to Dodd's measure.
The Republican plan would prohibit the use of taxpayer money to bail out failing financial giants in the future and impose federal regulation on many but not all trades of complex investments known as derivatives. Unlike in the Democrats' bill, large banks would not have to help pay for the failure of their peers. It also calls for consumer protections that are narrower than what Democrats and the White House seek, and it would place restrictions of financial assistance to mortgage giants Fannie Mae and Freddie Mac.
Republicans also were counting on the public to forget the Republican stalling tactics.
"You know, what happens on Monday or Tuesday versus what happens later is something largely lost on the general public," Senate Republican leader Mitch McConnell said.
But there were signs that Republicans would only stick with the strategy for so long.
Sen. George Voinovich, R-Ohio, said he would vote to let the bill advance to the Senate floor if bipartisan talks were no longer progressing.
"I have an idea of how much time it takes to cut a deal," he said. "If that's not possible, then we go on."