Today, after Republicans voted against beginning debate on Sen. Chris Dodd’s (D-CT) financial regulatory reform bill for a third time, Senate Majority Leader Harry Reid (D-NV) and the Democrats said that they were prepared to keep the Senate in session all night, forcing the GOP to actively filibuster the bill.

“All the talk of the Republicans about wanting to do something about this bill before it gets on the floor is really anti-Senate and anti-American,” said Reid. Sen. Claire McCaskill (D-MO) added that the plan “is to stay all night asking consent of Republicans to let us debate Wall Street reform. I just don’t get why we can’t debate.”

However, before it got to that point, the Republican leadership caved, and now seems poised to let Dodd’s bill come to the floor for debate. There doesn’t seem to have been any deal cut with the Republicans, aside from unspecified “loopholes” that Minority Leader Mitch McConnell (R-KY) claims were closed in the $50 billion resolution authority fund that the GOP has been railing against (but that many, including Federal Deposit Insurance Corp. Chairman Sheila Bair, support).

Already, Sens. Susan Collins (R-ME), Olympia Snowe (R-ME) and Lamar Alexander (R-TN) have said that they will be voting to move to debate. Sen. George Voinovich (R-OH) also seemed poised to vote to proceed earlier today, while Sen. Bob Corker (R-TN) dismissed the “alternative” plan that Republicans have been circling today (which, in large part, looked like Dodd’s bill anyway).

What remains to be seen is the sort of amendments that Republicans will propose during the actual floor debate. If they look anything like the amendments Republican members of the Senate Banking Committee drew up (then never offered) during committee markup, Democrats will have to take a strong stand against them. Floor debate is expected to take up to two weeks.

For what seemed like an eternity, the financial regulatory reform debate was bogged down over the question of consumer protection. Democrats wanted to create an independent Consumer Financial Protection Agency (CFPA) — such as that passed by the House of Representatives last year — while Republicans wanted to leave consumer protection responsibilities with the already existing bank regulators, which essentially amounted to an endorsement of the status quo.

The GOP complaint at the time was that the new agency constituted an overreach, and they falsely claimed that it would have to power to regulate Main Street businesses and would undermine bank profitability. So Sen. Chris Dodd (D-CT) tried to compromise in his financial reform legislation by placing a Bureau of Consumer Financial Protection within the Federal Reserve (which didn’t garner him any votes in the Senate Banking Committee).

And evidently all the time spent on this issue hasn’t changed very much, as Sen. Richard Shelby (R-AL) said yesterday that consumer protection still constitutes the “biggest obstacle” to forging a financial reform deal:

“The biggest obstacle is probably the consumer agency and the reach and the scope of it right now,” Shelby told reporters at the Capitol. “If they will meet us halfway on that, I think we could get a bill.”

Remember, Shelby has said that bank profits should always trump “consumer finance whatever.” To get a sense of what the Republicans consider “halfway,” we can take a look at their financial reform “alternative,” which has been floating around today (though doesn’t seem to be owned by any GOP lawmaker in particular):

Title III creates an independent Council for Consumer Financial Protection (“Council”) that will have the authority to promulgate rules for all of the enumerated consumer protection statutes. The Council will be composed of three independent consumer protection experts, the Chairperson of the FDIC, the Comptroller of the Currency, and the Chairman of the Board of Governors for the Federal Reserve. The composition of the Council will ensure that all rules, regulations arid orders promulgated by the Council appropriately consider the, safety and soundness considerations of financial institutions while ensuring that adequate consumer safeguards are in place.

A council, particularly one without a clearly defined director, will be almost powerless to stand up to the bank regulators. And of course, since the regulators themselves sit on the council, the council will almost inevitably be relegated to secondary status, all but enshrining that bank profitability is more important than consumer protection. Rep. Walt Minnick (D-ID) and a band of conservative Democrats had the same idea during the House financial reform debate, and it’s as bad now as it was then.

Plus, to make matters worse, the Republican alternative allows the federal government to preempt any and all consumer protection rules that individual states might put in place. So As Matt Yglesias put it, “on the one hand, [the GOP alternative] seemingly weakens the independence of the consumer regulator. On the other hand, it has the consumer regulator preempt any and all state regulations. This is a helpful reminder that nobody on the right actually gives a damn about federalism except as a tool to advance conservative substantive policy.”

For months now, Republicans have been mischaracterizing Sen. Chris Dodd’s (D-CT) financial regulatory reform bill as inevitably leading to “permanent bailouts,” institutionalizing the notion that some banks are “too big to fail.” For instance, Sen. Mitch McConnell (R-KY) said that Dodd’s bill means “a perpetual taxpayer bailout of Wall Street banks,” while Rep. Spencer Bachus (R-AL), the ranking member on the House Financial Services, said that it “would make AIG style bailouts permanent.” This strategy came right out of a memo penned by GOP pollster Frank Luntz, who said that the best way to defeat financial reform is to play on the public’s distaste for further bailouts.

Yesterday, for the second consecutive day, Republicans — along with Sen. Ben Nelson (D-NE) — prevented Dodd’s bill from coming to the Senate floor. But in an effort to look like they are doing something more than obstruct, they released their own “alternative” to the Dodd bill, as well. And interestingly enough, Republicans either also want to implement permanent bailouts, or they are acknowledging that their meme was complete bunk, as their alternative mirrors Dodd’s language when it comes to unwinding failing financial firms:

Title I of the Republican alternative will establish a resolution mechanism for the orderly winding-dawn and liquidation of financial companies. The resolution mechanism will provide a process for winding-down financial companies with minimal impact on the financial system while ensuring that failed firms are liquidated and creditors and shareholders bear all the losses of the failed firm and the costs of its resolution.

There are some minor tweaks that the Republicans have made, such as having the D.C. courts, rather than a panel of bankruptcy judges, give the go-ahead for a resolution. The GOP also did away with the $50 billion fund, built up through assessments on the biggest financial firms, that would be tapped in order to facilitate a firm’s dismantling. (In that way, the GOP plan resembles the Treasury Department’s original resolution authority proposal.) Otherwise, the Republican alternative looks just like Dodd’s.

This basically proves that the GOP’s opposition has been hot air aimed at currying favor with Wall Street, rather than actual policy differences. And in that regard, the lockstep opposition has been paying off, as for the first time since 2004, Wall Street is giving more money to Republicans than Democrats.

Though the differences aren’t huge, doing away with the $50 billion fund is, I think, an unwise move. In fact, the fund should be larger, closer to the $250 billion that the House originally proposed. The reason for this is simple. If one large financial institution is going under, chances are that others aren’t in good shape, and having to find other places to raise revenue can be dangerously pro-cyclical. As FDIC Chairman Sheila Bair has said, a pre-funded system “has significant advantages over an ex post funded system.” And in fact, a majority of Americans in a new Washington Post-ABC News poll favor a pre-funded mechanism for dismantling failed banks.