When the Senate returns into session this week, they may have a final vote on the Dodd-Frank financial reform bill. We know that Russ Feingold is the only Democrat who opposes the legislation, so that’s 57 votes in favor, pending a replacement for Robert Byrd. There’s a path to 60 without the Byrd replacement. Susan Collins has already basically endorsed, and Scott Brown proclaimed that he “likes what he sees.” Even Chuck Grassley may break ranks and vote yes on cloture. But Olympia Snowe had an interesting reaction yesterday:

Maine Senator Olympia Snowe said on Saturday she has not decided which way to vote on crucial financial reform legislation, with the most important thing being “to get it right.” [...]

“It’s a big issue, and the most important thing is to make sure we get it right,” Snowe told Reuters when asked if recent changes to the legislation had secured her support.

“I’m still looking at it — it’s this big,” Snowe said of the bill, holding her hands about six inches apart as she marched in the annual Moxie Festival parade in Lisbon Falls, Maine, which celebrates the state’s official soft drink.

It was “this big” when she voted for it in May, and the Senate bill she supported was the base bill in conference committee negotiations. If anything the bill went backwards from there, and more in the direction to the liking of a moderate Republican – Scott Brown got his hedge fund loophole, the credit rating agency piece was moved to a study, Section 716 was basically gutted. The conference committee changed a $19 billion bank fee at the last minute to specifically please Brown and Snowe and Collins. Paul Volcker, previously an enthusiastic supporter of the bill, now gives it a “B” and has given it a more reserved nod of approval. Virtually nothing inserted into the bill in conference would be so objectionable to make an Olympia Snowe switch her vote.

Except. This is pure speculation, but I wonder if Snowe’s reticence, and the larger reticence from those Republicans willing to vote for the bill in May, has anything to do with the Kanjorski amendment, which quietly made its way into the bill. Peterr mentioned it yesterday:

In essence, Kanjorski proposed that a group of 10 federal regulators be given the explicit power to break up big financial firms when they pose systemic risk. Not only that, the wording of the bill makes it clear that these regulators now face the expectation that they will use these powers.

This is a big shift in responsibility, away from the Federal Reserve, which implicitly had all kinds of emergency powers but would never have taken such action.

Who are the Kanjorski 10? This is the systemic risk council, which includes the treasury secretary (as chairman), the chairman of the Federal Reserve’s Board of Governors, the director of the new consumer protection agency, the head of Federal Housing Finance Agency, the chair of the National Credit Union Administration board, an individual who will represent insurance regulators and representatives from the each of the four standard federal regulatory agencies.

If two thirds of the council’s members agree (i.e., 7 out of 10), then a financial company can be subject to a variety of restrictions, up to and including the requirement that it divest itself of particular activities or more generally break up.

Now, this may not be the main complaint of the Northeast Three. There isn’t much advantage in them agreeing to the bill now, when other concessions on other bills can be exacted. But I have a nagging feeling that some Wall Street types have caught this in time, and are lobbying the Snowes of the world to kill the bill. It’s unknown (and frankly, unlikely) whether the systemic risk council would ever opt to break up a risky firm, but the mere possibility may scare the Big Money Boyz.

Keep in mind that the conference report cannot be amended, so either this passes or everyone goes back to the drawing board. We’ll see what Snowe, and the Senate, choose.