House Passes Reg Reform Bill, But Fate in Senate Remains a Mystery

WASHINGTON — Although regulatory reform cleared one hurdle to enactment on Wednesday with the House approving the final legislation, the bill's ultimate fate remains a cliffhanger as Senate leaders announced they would not consider it until after the Fourth of July recess.

The Senate's inability to complete the bill this week left it unclear if Democrats had the necessary votes to approve the final legislation and whether more turmoil could develop during the break.

While Sen. Susan Collins, R-Maine, said she would support the bill, Sen. Scott Brown, R-Mass., said he had not yet decided whether a budgetary maneuver added late Tuesday satisfied concerns he had with the legislation. Democrats hope to keep Brown's support in order to reach the 60 votes necessary to move to final passage.

"Anybody that tells you that they have it all figured out probably does not have much sense," said Donald Ogilvie, the chairman of the Deloitte Center for Banking Solutions. "I don't think they have the votes there for a real quick vote."

After the death of Sen. Robert Byrd, Democrats hold just 58 seats, and at least one of the two Democrats who opposed the bill last time — Sen. Russ Feingold — has said he will not switch his vote.

Of the four Republicans who voted for the bill during debate last month, only Collins had committed to supporting the final legislation.

"Based on my initial review of the final version of the conference report, I am inclined to support it," she said in a press release.

But Brown, whose concerns over the proposed bank tax forced lawmakers to reopen the conference committee and make changes to the bill, remained noncommittal. "I appreciate the conference committee revisiting the Wall Street reform bill and removing the $19 billion bank tax," he said. "Over the July recess, I will continue to review this important bill."

The tax was removed by the conference committee late Tuesday and replaced with provisions that would end the Troubled Asset Relief Program three months early and raise the required level of Federal Deposit Insurance Corp. reserves. (See related story.)

To pass the bill, Democrats must secure at least three more votes, and it was unclear how Sens. Olympia Snowe, R-Maine, and Chuck Grassley, R-Iowa, who previously supported the bill, will vote.

Speaking on the Senate floor Wednesday, Senate Banking Committee Chairman Chris Dodd said there was nothing more he could do. "I've done everything I know how to do to satisfy my colleagues. I don't know what more I could have done," he said. "After the July recess, we will vote on the financial reform measure."

Dodd told reporters Tuesday after reconvening the conference that he believed he had the 60 votes necessary to pass the bill, but he acknowledged things could change. "Obviously, until they actually cast the vote you never know," he said.

Analysts tracking the bill said that, though they still expect the bill to become law, leaving the legislation pending over a recess can give rise to new problems as lobbyists and observers unearth new details in the legislation.

"There is always a risk in trying to hold tough votes on a controversial bill over a recess," former Sen. John Sununu, who was on the Senate Banking panel, said in an interview. "The climate can change. People are going to continue to find things they weren't fully aware of in a 2,000-page bill."

Other analysts agreed.

"This is a huge bill, and those of us who actually read the bill are discovering things and saying, 'Whoa, I didn't know that was in there,' " Ogilvie said. "I know there is a lot of lobbying against it by the American Bankers Association and others to reopen it and make changes."

Michael Bleier, a partner with Reed Smith LLP, said it is hard to tell whether Snowe and Grassley will support the final bill.

"There are still some questions," he said. "Are they still going to be able to hold the other Republicans too? They haven't said anything. You just don't know."

Democrats could also persuade either Feingold or Sen. Maria Cantwell, who opposed the bill last month, to change their votes. Both have argued the bill does not go far enough to curb Wall Street.

Joseph Engelhard, a senior vice president with Capital Alpha Partners, said Democratic leaders might be able to persuade Cantwell to vote for cloture, a process that requires 60 votes and limits debate on the bill, and leave her free to oppose the bill on final passage, which requires only a simple majority.

"The best bet for Democratic leadership is to get Cantwell to vote 'yes' on cloture and 'no' on the entire bill," Engelhard said. "That is something that the Senate Democratic leadership is hard at work at right now. When you are just short one or two votes — that would be really critical."

Bleier said momentum still pointed to completing the bill even if the path there was uncertain.

"Politically both parties recognize that they have to get something passed. They can't go to the election and say nothing's been passed," he said. "There will be a bill."

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER