WASHINGTON — Senate Democrats signaled support for proposed restrictions on banks' lucrative derivatives trading businesses on Wednesday, making banks increasingly nervous as lawmakers begin final talks on financial overhaul legislation.
Senators huddling on Capitol Hill said Tuesday's victory in the Arkansas primary by Sen. Blanche Lincoln, D-Ark., will bolster her efforts to retain the provision, which could require banks to spin off their swaps businesses into affiliates. Lincoln said she does not plan on backing down on the issue despite the fact her provision is the top target of the nation's largest financial institutions.
"We're going to work hard to keep it in," Lincoln said after coming out of an afternoon meeting in which she was met with loud applause by other senators.
Fellow Democrats said Lincoln's victory in the hotly contested primary vote, which had been in doubt, will increase her presence in negotiations between House and Senate lawmakers over the coming weeks.
"I think it does," Sen. Christopher Dodd, D-Conn., said. "Her hand is strengthened in the process."
Sen. Tom Harkin, D-Iowa, who along with Dodd and Lincoln will be among those representing the Senate in talks with the House, warned that there is strong support in the Democratic caucus for Lincoln's proposal, known as 716 for its numerical position in the bill.
"I think there are some of us who are very strong for 716 and don't want to tinker with it. If you change it too much you might lose votes on our side," Harkin told reporters.
The nation's largest banks are lobbying against the restrictions, and for good reason: big banks earned more than $23 billion from derivatives trading last year, according to the Office of the Comptroller of the Currency.