One of the most important amendments to Sen. Chris Dodd’s (D-CT) financial regulatory reform bill that has yet to receive a vote is a proposal from Sens. Jeff Merkley (D-OR) and Carl Levin (D-MI) that would institutionalize what has become known as the Volcker rule. The amendment would ban banks from engaging in proprietary trading (trading for their own benefit) with federally insured dollars, thus removing the government backstop that such risky trading currently enjoys.
Yesterday, Ryan Grim reported that Republicans were threatening to filibuster the Levin-Merkley amendment. This would force it to face a 60 vote threshold, unlike many of the other amendments to the bill that have already been considered and which needed a simple majority to pass. Don Stewart, a spokesman for Minority Leader Mitch McConnell (R-KY), told Grim that the charge was overblown. “That amendment’s not even pending,” he said.
However, today, Dodd asked for unanimous consent to bring up the Levin-Merkley amendment (thus putting it into the voting queue, so to speak), but Sen. Richard Shelby (R-AL), on behalf of unnamed colleagues “who are not on the floor,” objected. Watch it:
If the Levin-Merkley amendment doesn’t receive a fair vote on the floor, it will be a real blow to the financial reform effort, as it’s imperative that regulatory reform force banks that receive federal support back into the traditional banking business — making loans and taking deposits. As Mike Konczal put it at New Deal 2.0, “if you are a bank you need to be regulated like a bank, and part of that involves not running hedge funds that put depositors and taxpayers at risk.”
The amendment takes Dodd’s bill, which gives regulators discretion in implementing a proprietary trading ban, and makes it a hard and fast rule. This is important because, as Volcker himself has said, “it’s very unlikely that the regulators and supervisors would evoke a strict prohibition until a crisis came and then it’s too late.”
Five former Treasury Secretaries have penned a letter to The Wall Street Journal saying that the Volcker Rule is “a key element in protecting our financial system and will assure that banks will give priority to their essential lending and depository responsibilities.” The rule, as written in the Levin-Merkley amendment, also has the support of Dodd himself and of the Obama administration. Yet, Republicans are preventing it from coming to the floor for a vote, going to bat for the big banks that want to trade on the backs of American taxpayers.
Republicans also prevented an amendment from Sen. Byron Dorgan (D-ND), which would ban naked credit default swaps, from coming up for a vote.