Just one day after Republicans banded together to block a Senate debate on regulatory reform legislation, Democrats appear to be picking up bipartisan support for a proposal once considered among the least likely to survive, the Volcker Rule to ban proprietary trading.

The catalyst was a Senate hearing that essentially put Goldman Sachs' on trial for its business model of taking both sides of a bet. Emails released ahead of the hearing by the Senate Permanent Subcommittee on Investigations appear to depict Goldman executives as celebrating the collapse of the housing market, even as their clients lost money.

That brought the issue of proprietary trading home for lawmakers on both sides of the aisle, including Republican panel members Susan Collins and Tom Coburn.  

“It is unsettling to read e-mails of Goldman executives celebrating the collapse of the housing market when the reality for millions of Americans is lost homes and disappearing jobs,” Collins said. “Clearly the system needs to be reformed.”

It didn't hurt that current and former Goldman executives testifying at the hearing appeared to duck questions, irritating panel members.

Some observers, including Simon Johnson, an economics professor at MIT and a co-founder of Baselinescenario.com, speculated that the hearing could put debate on reform legislation back on the fast track.

In an online poll, just 18% of respondents said Goldman's involvement in bearish bets against the housing market is "the best argument yet for the Volcker Rule." Another 15% said it is "more evidence we should reform the rating agencies," while 25% said it is "a good reminder of the adage 'buyer beware'" and 41% said it is "part and parcel of what an investment bank does – match bullish and bearish investors, hedge positions."

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