So I leave for just a couple of hours, and the story I’ve been following for weeks comes to a resolution. Sheesh…

OK, so here’s what happened, as best as I can tell. Last I left things, cloture had passed on the Wall Street reform bill, but there were two outstanding post-cloture amendments. One concerned exempting auto dealers from the CFPA (the Brownback amendment); the other was the Volcker rule (Merkley-Levin), which was attached to Brownback as a second-degree amendment. If both passed, both got in the bill; if Brownback didn’t pass, Merkley-Levin wouldn’t get in the bill.

This set up an interesting dynamic. The Republicans wanted to exempt the car dealers, but were petrified of allowing a vote on Merkley-Levin, which the banksters strongly opposed. And Wall Street won out, as they got the GOP to withdraw the Brownback amendment, because they were so afraid of Merkley-Levin.

HuffPost caught up up with Merkley off the Senate floor. Ultimately, he said, there were two reasons his amendment didn’t get a vote. “One is that it would probably pass and Wall Street doesn’t want it to pass, but the second reason is, I believe that colleagues who were planning to vote no didn’t want to have to vote no. If they voted no it would make Wall Street happy but would make their constituents mad, because this is the type of fundamental reform that is expected for us to get done,” he said.

Merkley said that he was told by colleagues that bank lobbyists were pressuring Brownback to withdraw his amendment. Merkley pressed Brownback to split the amendments apart. He said Brownback was open to the suggestion but needed the permission of his leadership.

Merkley said that he got a commitment from Democratic leadership to push for the principles of his amendment in conference committee negotiations between the two chambers.

In a statement, Merkley said, “If this wasn’t a sign of the Republican leadership siding with the interests of Wall Street over the families and businesses on Main Street, I don’t know what is. Wall Street lobbyists were desperate to block our amendment that would have helped prevent a future financial crisis and bring accountability to our financial markets.” Smart Democrats would make a massive deal out of this. The Republicans sided with Wall Street over LOCAL CAR DEALERS to block consideration of their own amendment.

With Republicans withdrawing the amendment, there was no need for any further post-cloture time, the only order of business left was a budget point of order. Because Democrats got rid of that $50 billion dollar resolution pre-fund paid by the banks, the bill actually cost money, and with no offsets, it violated paygo. So Jeff Sessions threw up a budget point of order, and the Senate voted 60-39 to waive that, with Cantwell substituting for Specter, who took off (is this going to be a regular pattern now? Does Specter have senioritis?). So Cantwell, who doggedly fought for her derivatives amendment, gave up on the budget point of order and voted with the majority. Does this mean she got some assurances about the derivatives loophole? It’s unclear.

Finally, they moved to final passage, only needing a majority, and it passed 59-39, with Cantwell flipping BACK to no and Robert Byrd not voting. That’s a pretty cynical move from Cantwell.

The Republicans did get a non-binding “instruction to conferees” to include the auto dealer exemption, which is in the House bill, but I can confidently say there’s no chance that’ll get in the final bill. The White House is actually strongly against it.

However, there are a host of other issues that need to be fixed or strengthened, as well as things that may get weakened, in conference committee, and the resolution of all that is completely up in the air. Cantwell fake-fought for her derivatives piece, and unless she got some assurance, that massive loophole might remain. Check out this press release from her office:

“While this bill takes much needed steps to help prevent a crisis of this magnitude from ever happening again, it fails to close the very same loopholes in derivatives trading that led to the biggest economic implosion since the Great Depression,” Senator Cantwell said. “Throughout this debate I have fought hard against efforts to weaken this legislation as well as to pass language to strengthen it further. But the fact of the matter is, without key reforms in derivatives trading, this bill does not safeguard America’s economy from a repeat of this crisis.
It sets up a process for responding the next time we have a financial crisis, but it doesn’t prevent this kind of thing from ever happening again. We have to stop these kinds of dangerous activities. We need stronger bans on banks gambling with depositors’ money. We need bright lines – like Glass-Steagall – that separate risky activities from the traditional banking system. We need to refocus our financial system away from synthetic bets and get more capital into the hands of job creators and Main Street businesses. There are good, strong provisions in this bill, and I’m proud of the work we did to get them in there, but I fear that without closing the loopholes primarily responsible for this economic meltdown, we are missing the entire heart of the matter.”

You know, she could have held up the whole thing on the budget point of order, but she… didn’t. So this is missing a piece here.

The consensus from the people I trust is this is a step forward and probably better than we could have hoped for from the Senate, but not transformative. As Ted Kaufman said in a statement, “I am disappointed the Senate did not pass a stronger bill.”

I’ll have more in the morning.

UPDATE: This is a pretty solid summation from David Kurtz:

Historians will probably conclude that the package of reforms was surprisingly modest given the depth and severity of the 2008-09 financial crisis. A harsher historical judgment might find that the political and economic power wielded by the financial industry in the late 20th and early 21st centuries was so extensive that it could weather a near total collapse of the system without having to yield its power or privilege.