WASHINGTON — Though Democrats gave ground Tuesday on the Republicans' top agenda item for regulatory reform — ensuring the bill would not allow the government to bail out large financial firms — GOP leadership said it was not enough for them to support the legislation.
Senate Republican leaders said much more work was needed on other parts of the bill, including minimizing the range of a new consumer protection agency and softening provisions designed to regulate derivatives.
"As we've had more and more opportunity to take a look at the bill, it is certainly obvious that it is a dramatic overreach," said Senate Republican Leader Mitch McConnell. "This bill would touch such entities as auto dealers. It would touch a candy company that tries to hedge sugar prices. In short, the bill reaches into every nook and cranny of American business."
Republicans were emboldened Monday by their ability to block debate from starting on the bill. They also managed to gain the support of one Democrat, Sen. Ben Nelson of Nebraska, who voted with the GOP against cloture. A second vote Tuesday also failed, again in a 57-to-41 vote and with Nelson voting with Republicans.
Until Tuesday, McConnell had focused largely on the bill's provisions to allow the government to seize and unwind a systemically important institution, claiming it was riddled with loopholes. After Sen. Richard Shelby, the top Republican on the Banking Committee and the GOP's principal negotiator, said Tuesday that he and Chairman Chris Dodd had reached a deal on that issue, McConnell moved on to other concerns.
"I thought, and I think most Americans thought this was all about Wall Street. But as you look at the bill closer and closer, you see that it is mostly about Main Street, which underscores why Senate Republicans have felt unanimously, including one Democrat, Senator Ben Nelson, that this bill needed a lot of work before we turn to it on the floor," McConnell said.
Shelby acknowledged progress on the bill.
"We have made considerable progress in the last couple of days in dealing with the section on 'too big to fail,' " Shelby said. "They basically have agreed to some of our recommendations to strengthen that section to send that message I think that nothing is 'too big to fail' and if you fail we are going to wind you up."
Still, after weeks in which the GOP focused almost exclusively on that issue, Shelby then proceeded to downplay it.
"The biggest obstacle is probably the consumer agency and the reach and the scope of it right now," Shelby said. "On the derivatives, that has not been worked out yet, but we hope it will be satisfactorily. But to get a bill, we're going to have to deal in a meaningful way to limit the idea of where they want to go with this consumer agency, because it will be so sweeping in scope and breadth, it'd reach into everything in our economy, just about anything dealing with credit."
Dodd said he was frustrated by Republicans' refusal to allow debate on the bill until a final deal is reached. He also countered some of Shelby's concerns, saying the bill makes it clear that the consumer agency would not cover dentists or retailers. Under the bill, the consumer agency would only have power over entities primarily engaged in consumer financial products and services, he said.
Dodd said it is impossible to reach a deal before moving to debate the legislation on the floor.
"We are not going to write this whole bill between two senators," he said. "I can't take on every issue in the committee. The 'too big to fail' one was the one identified by the minority leader as the reason they felt they couldn't go to the bill. We've resolved that in my view and again if they've got some technical changes they want to add to this I'm happy to consider this."
Dodd said he cannot understand why Republicans are continuing to oppose debate.
"We can't resolve these matters unless you debate them," he said. "Now how many more days do they want to go? Ultimately, they are going to vote to allow us to debate but in the meantime I think they hurt themselves terribly in the eyes of the American public after what our country has been through to deny us an opportunity to debate this bill."