Today, Senate Banking Committee Chairman Chris Dodd (D-CT) plans to unveil his latest financial regulatory reform legislation, which will, by all accounts, vary significantly from the bill that he first proposed last November.
Since then, Dodd has gone through two rounds of negotiations. The first, with the banking committee’s ranking member, Sen. Richard Shelby (R-AL) ended at an “impasse,” and the second, with Sen. Bob Corker (R-TN) ended last week, after Dodd decided that the whole process was taking too long and it was time to move forward.
The highest profile item in the negotiations has been whether or not to create a Consumer Financial Protection Agency (CFPA) and where such an agency should be housed (if anywhere). Dodd’s initial proposal created a completely independent CFPA, but the negotiations with Corker produced a compromise in which a scaled-down CFPA would be placed within the Federal Reserve.
Details of the new bill are slowly leaking out, and according to various reports, Dodd is keeping many of the compromises reached with Corker, including housing the CFPA in the Fed and allowing a council of bank regulators to veto the CFPA’s rules (with a two-thirds vote). But including these provisions have earned Dodd a grand total of zero Republican votes:
Corker said Dodd’s new bill almost certainly would not get his and other Republicans’ support. Still, he said it will be “a huge improvement” over the initial proposal that Dodd released last November. “It will be a much better bill,” Corker said. “I think this last month has helped produce a far better product.”
Shelby added today that Republicans agree with 85 to 90 percent of the Dodd bill. Despite this, and characterizing it as a “huge improvement” and a “far better product,” the GOP still plans to offer Dodd absolutely no support.
With no GOP help forthcoming, it’s unclear why Dodd feels the need to retain the compromises that he made with Corker. If Republicans have already predetermined that they won’t join in, why not put forward a strong bill and force them to vote against it? There are enough Democrats on the banking committee to move a bill forward, and once it reaches the floor, some of the more moderate Republicans may be enticed into voting for it, while the rest will have to openly display their animosity toward financial reform and consumer protection.
Plus, Democrats now have the Fed’s Consumer Advisory Council (which was formed in 1976 to give the central bank input on consumer issues) on its side, which said in a letter to Dodd that it would be “imprudent” to house the CFPA at the Fed. “Consumers will be served only by having the C.F.P.A. as an independent agency where the primary responsibility is consumer protection,” the letter said.
Just like they did during the health care debate, Republicans are refusing to support a bill that includes their ideas, and calling for the process to slow down, claiming that if they receive more time to “review the language,” bipartisanship is still possible. Dodd should not only disregard this as a blatant attempt to obstruct the reform effort to death, but he should also put out the strongest bill that Democrats will support and dare the GOP to oppose it.