– The author is a Reuters Breakingviews columnist. The opinions expressed are his own –
By James Pethokoukis
WASHINGTON, March 23 (Reuters Breakingviews) – The effort to reform the U.S. financial regulatory system was supposed to show the Senate working more or less as intended — bipartisan up to a point, and largely non-confrontational. But it’s starting to follow the healthcare bill’s more contentious path.
Hundreds of Republican and Democratic amendments to the legislation authored by Democrat Chris Dodd, the panel’s chairman, were supposed to be hashed out by the relatively expert Senate Banking Committee this week. Instead, Republicans yanked their proposed changes, and the bill was approved with just Democratic support. Now it will be hashed out on the Senate floor. Democrats will need to bring at least one Republican across the aisle to hit the 60 votes needed to be certain of passage.
How might that happen? The bulls’ case is that the surprise move was OK with both sides. It permits continued closed-door chats between Dodd and key Republican Senators Richard Shelby and Bob Corker. The result could be a compromise that sails through the full Senate. That’s what happened last year with credit card legislation.
But this round of financial reform is far more wide-ranging and complicated. One look at the discarded committee amendments shows huge differences. Take Dodd’s proposed $50 billion bank-funded reserve that would backstop troubled institutions. Key Republicans want no fund at all, arguing it would encourage risky bank behavior and anyway wouldn’t be big enough. Some Democrats, on the other hand, want to make the fund $150 billion.