WASHINGTON — Republicans, as promised, banded together to block Senate debate on regulatory reform legislation Monday, picking up opposition from one Democrat Sen. Ben Nelson of Nebraska.
The vote of 57 to 41 deprived Democrats of the 60 votes needed to overcome a filibuster.
Still, the legislation's final chances for passage remained strong, as Senate Banking Committee leaders continued to work on crafting a deal that would ensure it has some bipartisan support.
Sen. Richard Shelby, the panel's lead Republican, said Monday that the cloture vote to begin debate showed that Republicans were united in raising concerns with Chairman Chris Dodd's bill, but he said he remained confident a compromise could be found.
"It shows we are together and we have a lot of concerns as Republicans," Shelby said at an Independent Community Bankers of America conference. "But at the same time Dodd and I and our staffs will continue to negotiate in good terms."
Assuming all Democrats support the final bill, they just need one Republican to avoid a potential filibuster threat and pass the bill. A spokesman for Nelson did not comment on why the Nebraska Democrat voted against cloture, but a Wall Street Journal story on Monday suggested he was seeking changes to derivatives legislation included in the bill.
Democrats remain convinced they do not have to compromise very much on the bill, calculating that Republicans are reluctant to vote against the legislation for fear of appearing too close to politically unpopular banks.
Senate Majority Leader Harry Reid took to the Senate floor Monday to argue Republicans are not serious about protecting taxpayers and repairing the broken financial system.
"Democrats stand for bringing more accountability and transparency to Wall Street. As far as I can tell, the only thing Republicans stand for is standing together," said the Nevada Democrat.
As a result, Republicans were threatening to introduce their own version of reform soon to give the GOP something to rally behind.
Dodd expressed frustration on Monday that debate could not start.
"How are we ever going to resolve it if I can't even bring up the bill to have the kind of debate that this chamber was designed to engage in?" he said on the Senate floor. "What's the point of having a hundred seats here coming from fifty states when a major issue affecting our country cannot even be the subject of a debate?"
But most political analysts said the latest fight was little more than a negotiating tactic. "I would expect negotiations to continue in the week and set up a next cloture vote later in the week, maybe next week," said Brian Gardner, an analyst at KBW Inc.
Lobbyists and analysts said relatively small changes could free up some GOP members to vote for the bill later. For example, some sources argued that Republicans had focused too much attention on the $50 billion resolution fund, decreasing their leverage to impact other provisions in the bill. Although Shelby has argued that his concerns over the bill perpetuating "too big to fail" go deeper than the fund, the broader GOP message has been more limited.
With the administration opposed to the provision already, it's a relatively easy provision for Democrats to jettison and potentially capture some Republican votes.
Lawmakers agree on the overall concepts of the bill and are negotiating details over derivatives regulation, resolution authority and consumer protection enhancement. Shelby said he wanted to decrease the flexibility that the Federal Reserve Board and Federal Deposit Insurance Corp. would have for resolution authority while he and Dodd are still hashing out how much power a new consumer regulator should have.
Derivatives seems to be a final piece of wrangling. Dodd and the Agriculture Committee reportedly reached an agreement on derivatives to merge their respective bills. Bankers, along with the Treasury Department, are opposed to a provision that would force them to spin off their dealers.
But Shelby said he supported restrictions on derivatives trading.
"We're looking at the language of that right now and the implications of that," he said. "I do believe we've got to get away from the casino mentality of Wall Street which would put our whole banking system at risk."
Sen. Bob Corker, R-Tenn., agreed. The question is "does this or does this not have an impact if they can do it through subsidiaries," he said