Two Senate Republicans may have effectively killed the far-reaching financial reform legislation for another year.
Sen. Phil Gramm of Texas and Sen. Richard C. Shelby of Alabama used procedural rules to stall the bill because they object to provisions expanding the Community Reinvestment Act. The heart of the historic legislative package-allowing banks, insurance companies, and securities firms to merge-has broad support.
Because of the maneuverings, "the bill is over, done," a veteran banking lobbyist said.
Rumors swirled Tuesday that Senate leaders had decided to abandon the effort, but the majority leader, Sen. Trent Lott of Mississippi, insisted he has not given up. "I am still hopeful we can get it finished, but time is running out," he said.
Sen. Lott's spokesman added later that Senate leaders, if necessary, will try to attach the financial reforms to other legislation that must be enacted before Congress adjourns this weekend.
Supporters were thrilled when the Senate voted 93 to 0 late Monday on a procedural motion to proceed on the bill. But then Sen. Gramm objected, forcing another procedural tally that is scheduled for Wednesday. Similar roadblocks could delay debate until at least Friday.
The Texan filed 10 proposed amendments to the Internet tax moratorium bill to kill more time Wednesday.
"Given the time left, Gramm and Shelby can win," said a Republican aide to another senator on the Banking Committee. "Everybody realizes that."
Still, supporters are holding out hope that a deal will be cut on the CRA provisions to pave the way for swift Senate approval. The House, which passed its version of financial reform in May, is expected to accept the Senate's version.
Though a presidential veto looms over the legislation, a deal with the administration is also possible.
"At the end of a session there are a lot of things that happen very, very quickly," said Steve Judge, a Securities Industry Association lobbyist who used to work for the House Banking Committee.
Immediately after Monday's vote, Senate Banking Committee Chairman Alfonse M. D'Amato urged Sen. Gramm and Sen. Shelby to back down in exchange for limited debate and a separate vote on the CRA provisions.
"The need for legislation to modernize the financial industry is obvious," said Sen. D'Amato, a New York Republican. "The existing legal framework has been for some time fundamentally outdated .... Let the will of the Congress decide and not let the clock of a late session be the enemy of progress."
But Sen. Gramm responded that he was fighting on principle. He called CRA "the greatest national scandal in America" because community groups can unfairly use it to block bank mergers and exert pressure for investments in their causes.
"We will, if we can, stop this bill unless some accommodation is made on the effort to expand CRA," he said. Sen. Gramm's spokesman said Tuesday that no talks had occurred on a compromise.
"No matter what you hear ... the plug has not been pulled on this bill yet," said Sam Baptista, president of the Financial Services Council. "Until the end, it's probably going to look next to impossible."
Mr. Baptista, who has been lobbying for financial reforms for a decade, predicted HR 10 will be enacted this year.
"There is still a good chance the Senate can pass this," agreed Robert A. Rusbuldt, vice president of federal affairs at the Independent Insurance Agents of America. "I have not given up."
Like his allies in the fight, David J. Pratt, senior vice president for federal affairs at the American Insurance Association, admitted the legislation faces long odds. "But we have to pursue this to the last possible moment," Mr. Pratt said.