Republicans Block Start of Debate on Financial Bill

Republicans Block Start of Debate on Financial Bill
By DAVID M. HERSZENHORN
Copyright by The New York Times
Published: April 22, 2010
http://www.nytimes.com/2010/04/23/business/economy/23regulate.html?hpw


WASHINGTON — Senate Republicans on Thursday blocked an effort by Democrats to start debate on legislation to tighten regulation of the nation’s financial system, and the two sides traded bitter accusations about who was standing in the way of a bipartisan agreement.

The majority leader, Harry Reid of Nevada, asked Republicans to agree to begin debating the measure, which would impose a sweeping regulatory framework on Wall Street and big financial institutions. But the Republican leader, Senator Mitch McConnell of Kentucky, objected, saying Democrats were pre-empting negotiations to reach a deal.

In response, Mr. Reid said he would call the first procedural vote on Monday in an effort to stop the Republican filibuster. That vote could test Republican resolve to oppose the measure in an election year, amid public dismay over big Wall Street profits and bonuses even as unemployment remains high.

President Obama traveled to New York City on Thursday to press the case for the bill by giving a speech not far from Wall Street.

At the Capitol, Senate Democratic leaders stepped up pressure on Republicans, and at an unusual news conference, they showed video clips of Republican leaders leveling what the Democrats said were false criticisms of the bill.

At the news conference, Mr. Reid suggested that Republicans were stalling and expressed doubt that the negotiations would yield any agreement.

Republicans have said that renewed talks are yielding progress that could lead to an agreement, but neither Democrats nor Republicans have pointed to any concrete changes that had been agreed to in recent days.

“Every indication is that the chairman and the ranking member are making progress in their discussions, and that this bill will have needed improvements,” Mr. McConnell said in a speech on Thursday.

Mr. Reid, however, noted that Democrats had tried for two months to reach a deal with Senator Richard C. Shelby of Alabama, the senior Republican on the banking committee, and another month working with Senator Bob Corker, Republican of Tennessee, who is also on the committee. If Republicans are ready to deal, he said, they should agree to begin debate.

“I’m not going to waste any more time of the American people,” Mr. Reid said.

But it was the unusual use of video clips that was most striking about the Democrats’ aggressive posture. First they showed Mr. McConnell repeatedly denouncing the legislation, saying it would encourage, rather than prevent, future taxpayer-financed bailouts of big banks. Both sides agree the bill is intended to end bailouts.

“This bill not only allows for taxpayer-funded bailouts of Wall Street banks, it institutionalizes them,” Mr. McConnell says on the video in a speech on the Senate floor. In another clip, Mr. McConnell says, “It provides for an endless taxpayer bailout of Wall Street banks.”

Senator Richard J. Durbin of Illinois, the No. 2 Democrat, accused Mr. McConnell of ignoring the legislative text.

“If you listen to this comment by the minority leader of the United States Senate you wonder if he has read the bill, particularly if he has read the section between pages 110 and 295, which is entitled ‘Orderly Liquidation Authority,’ ” Mr. Durbin said.

“Liquidation is the end of the bank,” Mr. Durbin said, “not a bailout that it could continue in business. It describes all the steps that would be taken under the bill to liquidate the bank. The management team is fired. The shareholders are wiped out. The firm’s assets are sold off to pay any firm debts. Once the money is gone, the creditors are wiped out. The taxpayers don’t pay for any part of this, and at the end of it, the company is gone. There is nothing to bail out.”

Then, the Democrats showed clips of the No. 2 Republican, Senator Jon Kyl of Arizona, saying the legislation would interfere with auto dealers, dentists or optometrists who allow their customers to pay off bills over time.

“Senator Kyl says that the bill would regulate your dentist or your optometrist or your butcher if they let you pay over time — once again, not true,” Senator Charles E. Schumer, Democrat of New York, said.

Mr. Schumer said Democrats were moving quickly to hit back after learning a lesson from the recent health care debate.

“On the health care bill we allowed too many lies to get out there without rebuttal because we thought they were so obviously untrue,” he said. “Well, we have learned our lesson and the minute these things come out of the mouths of some of our Republican colleagues, we rebut them.”

The bellicose stance by Democrats, even as Republicans insist they are hopeful of a bipartisan deal, carries some political risk. Voters, often frustrated by the acrimony in Washington, could decide that Democrats, who control Congress and the White House, are being arrogant by refusing to make concessions.

And Mr. McConnell, in his floor speech, said it was the Democrats who had not been honest with the American public.

“When the financial regulatory bill the majority was about to bring to the floor last week still contained a number of loopholes allowing for future bailouts, I raised the alarm,” Mr. McConnell said. “I wasn’t about to take Democrat assurances that this bill protected taxpayers. I wanted them to prove it.”

“That’s really what this debate is all about: it’s about proving to my constituents and to the rest of the country that we actually do what we say we’re going to do around here because if you haven’t noticed, there’s a serious trust deficit out there,” Mr. McConnell added.

He accused President Obama of failing to deliver on a promise to reduce the nation’s debt, of not creating the promised number of jobs with last year’s economic stimulus measure, and of favoring labor unions in bailing out American auto companies.

“People need to be convinced that we’re doing what we say we’re doing,” Mr. McConnell said. “This time they want proof. And frankly, I don’t blame them.”

Amid the partisan rhetoric, officials on both sides said they were still working to iron out a few disagreements over specific provisions in the financial regulatory legislation, and that they remained optimistic that the overhaul would be approved.