Democrats are plowing ahead with another cloture vote, as scheduled, on the Wall Street reform bill. Virtually nothing has changed, at least publicly, since the last try at a cloture vote, so it’s unclear whether any of those who opposed the last cloture vote would come around. The key members to watch are Maria Cantwell, who has been holding out for a closure of the derivatives loophole; Russ Feingold, who generally thinks the bill is too weak; and Scott Brown, who told Harry Reid yesterday that he supported cloture, only to vote against it.
More as the votes roll in…
…Scott Brown voted yes to move the bill forward. So while Cantwell and Feingold are still no votes, they’ll probably have enough votes to pass this.
…Snowe votes Aye, so unless Susan Collins changes her tune, cloture will be invoked on the bill today with the barest of margins. And what that means for the derivatives loophole is anyone’s guess.
…Collins is an aye, so this will pass 60-40.
By the way, there’s still work to be done post-cloture. Sam Brownback’s amendment on exempting car dealers from consumer protection will get a vote, and Jeff Merkley attached his Volcker rule amendment to that as a second-degree amendment. Brownback would have to pass for Merkley-Levin to take effect, so it’s a bit of a Hobson’s choice.
I don’t think we’ll see any other amendments, other than a manager’s amendment, which may need a cloture vote, too.
…What the GOP will probably try to do is table the Merkley-Levin amendment, splitting it off from the Brownback amendment, and then try to pass the Brownback amendment straight-up. That’s the remaining drama in this bill, as far as the Senate is concerned. Of course there will be a conference committee after this.
…Cloture gets invoked 60-40.
UPDATE: Chris Bowers has the best explanation of next steps. Expect votes on Brownback and Merkley-Levin, in one form or another, and then final passage, probably sometime tomorrow. Barney Frank predicted a bill signing ceremony “well before” the Fourth of July.





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Cantwell and Feingold voted no — must signal that they aren’t happy yet with the terms of this legislation.
We need to immediately throw some major league support to Cantwell and Feingold for standing up to the Kabuki theater. From an earlier comment on an earlier post:
Who just said “You the Man!” into the open microphone?
I think people focus too much on the inside baseball of the particular amendments.
A lot of power already exists in the law (even before the FinReg Bill) to give the administration the ability to crack down on bad things in finance.
They really need to get this off the table, for the simple fact that the Jobs Recession doesn’t end until the banks start lending again. And they won’t do that if there’s a lot of uncertainty coming out of Washington.
So Scott Brown put them over the top. Well I’m sure Wall Street won’t forget that favor from him. So much for real derivatives reform.
Going to take more than this to get banks to start lending.
Think about it: they burned themselves by using very loose lending standards for too long, and now they have overtightened them. What will encourage them in this bill which get them to loosen lending again?
Nothing. This is now a market problem without a competing loan facility to force the market to act more competitively in lending.
Yeah but it took nearly all of the Dem caucus to put him there. What a disgrace.
60 votes is just too easy for the corporations right now. All they have to do is get the Democrats base riled up about Republican obstruction and then pick off one Republican. It’s too easy. Health care. Wall Street. Oil industry. One, two, three. EASY! And totally sad for average Americans.
And don’t misunderstand my point, if it was McConnell in charge he would be the one needing to get 60 votes for the corporations. We have a LOT of work to do in America if there is going to be representation BY the people and FOR the people.
I think the real problem was that they were overleveraged, and they were allowed to create shadow lending facilities (including money market mutual funds) to get around proper regulation.
They do not need specific derivatives reform. The powers that the administration has, and will get, are sufficient to regulate the product.
Aren’t Fannie, Freddie and the Federal Reserve holding $1 trillion of mortgages enough of a competing loan facility?
Now that the government is back on the backs of practically every bank in America, they really just need certainty about the law right now.
Nonsense. What specific powers does the administration have. Treasury, Justice, where have they shown any serious ability or interest in reigning in the really stupid risks and leverage. Seems the administration has done more to prop up the banks and traders than take them down a big notch. Isn’t the Fed meant to be overseeing most of the serious regulating anyway. As far as I can tell, the administration is a non factor. Geithner might as well be working for Bernanke.
Agreed. It’s going to be a long uphill battle to abolish the House and the Senate.
Plunge on ahead, you stupid m…..f…..s! We, the public, will have our revenge for your perfidy sooner than you think!
Make your applications here to join the Democrats Against OBAMA! And remember; “One term was a ‘mistake’”; two would be TREASON !!!!!!!”
Do you actually know anything about derivatives?
So much for Olympia Snowe “supporting” Maria Cantwell on the very important derivatives loophole issue that Cantwell has thankfully highlighted (support that Michael Greenberger heard was the case, per dday’s helpful interview earlier today with Greenberger)… Snowe got her small business-serving amendments up for votes, with solicitous assistance, early and often, from Senator Dodd, and that’s all Snowe cares about, apparently – quid pro quo.
You cannot separate the derivatives from other lending. The over-leveraged products and the shadow lending facilities were part and parcel. The industry knew it, they’ve admitted it, it’s been written about ad nauseum.
Unless the derivatives themselves are subject to scrutiny in the same manner as other equity and risk management vehicles, there’s too much incentive to continue to hide the crap where it can’t be seen.
And no, Fannie/Freddie were the dumpsters, not competing entities. The mortgage industry understood it, the mortgage servicers understood it, so did the foreclosure servicers, long before these GSEs were forced to be the ultimate trash collection service for the subprime debacle. They knew they had a backstop, not a competitor. More importantly, they had a backstop on investments, not on mortgages. This needs to be severed with a re-implementation of Glass-Steagall.
Or are you going to tell us that Glass-Steagall didn’t work?
In the modern (i.e. electronic, computer-driven) economy, Glass-Steagall only worked for a short time. Then, companies just found too many ways around it. So Congress got rid of it.
What was the principle of Glass-Steagall? That commercial banking should be separated from investment banking. In that way, depositors money (which is by-and-large insured by Federal Deposit Insurance)is not directly used to fund venture capital, or speculation, or securities trading. Or to pay insurance claims.
But what happened is that the ability to borrow and lend became much more easy and the lines between a loan on collateral for commerce or for investment became blurred. An example is money market mutual funds. They are unregulated banks, essentially. Sure, there’s the 1940 Investment Act (meaning, they have to give reports to shareholders and say how and what they invest in), but money market funds were were not insured. One fund “broke the buck” (traded for less than $1) in 1994, and the fund company paid off everyone in full and closed the fund. It happened one more time before the Lehman Shock, and I think the people got 97 cents.
Money market mutual funds are, essentially, deposit-taking banks. But they were totally outside of Glass-Steagall. And would continue to be if Carter Glass could be resurrected and have his law go in again. And that’s a $2.5 TRILLION industry. Much bigger than the largest “too big to fail” banks.
Derivatives are a red herring. People say “regulate derivatives”. Well, they already are. And which derivatives? I think it was credit analyst James Grant (Grant’s Interest Rate Observer) who said that paper money was the world’s first derivative, since it was purportedly valued based on the underlying gold that it represented.
During what Pimco’s Fred MacCauley referred to as the Quiet Period (1933-1980), there were virtually no banking crises. BUT there was a major inflation that took the value of a dollar down to about 20 cents. Also, wage and price controls and a big dollar devaluation. All during Glass-Steagall.
So there is no easy solution or rule to prevent all the future financial problems. Yes, there needs to be more regulation—everyone is on the same page with that. But the idea that somehow if someone’s derivative amendment doesn’t get added in then the new bill is worthless is a little silly. Anyone that knows financial history would recognize that.