Prospects brighten for financial overhaul as GOP senators cool attacks

[TomCADem]

Source: The Seattle Times

WASHINGTON — Less than a week after Senate Republicans unleashed a blistering attack on pending legislation to rein in Wall Street, they began striking a more conciliatory tone Tuesday that improves prospects for the next major item on President Obama's domestic agenda.

Many Republicans appear to be shying away from another scorched-earth battle like the one over health care, a sign they may have reached their limit for being portrayed as the "party of no," particularly on the issue of financial legislation.

Last week, Senate GOP leader Mitch McConnell, R-Ky., charged that the Democratic legislation left the door open to big government bailouts. He produced a letter opposing it signed by all 41 Republican senators, the number of votes needed to sustain a filibuster.

But now Republicans seem intent on making it clear they want to change the financial- overhaul bill, not kill it.


Read more: http://seattletimes.nwsource.com/html/nationworld/2011657470_overhaul21.html

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The question is whether Republicans will continue to insist on dropping any regulation of financial derivatives, which is Mitch McConnell's pet cause.

[TomCADem]

1. Here is WaPo On The Key Issue: Derivatives Regulation. GOP Wants It Out

This is the 800 pound gorilla that GOP is trying to ignore and protect:

http://www.washingtonpost.com/wp-dyn/content/article/2010/04/20/AR2010042005311.html?hpid=topnews

The wrangling between the two parties over the details of the bill continued as members of the Senate Agriculture Committee planned Wednesday to hash out a hotly contested element of the legislation: a measure to establish oversight of the vast financial derivatives market.

Derivatives are contracts that allow financial traders to bet on the direction of the prices of stocks, commodities and other assets. They can also be used by companies to lock in prices for goods, such as oil, cotton and aluminum, that often fluctuate in value. Derivatives account for hundreds of trillions of dollars in deals and were a significant contributor to the financial panic that swept the world in 2008, in part because of a lack of transparency in the market.

The bill advocated by Sen. Blanche Lincoln (D-Ark.), chairman of the agriculture panel, calls for banning big Wall Street firms from acting as brokers for commercial companies and financial speculators who want to trade derivatives. Nearly all derivative contracts would be traded in public on exchanges and approved by a separate clearinghouse. Those dealing in derivatives would have to raise money to cover unexpected losses, in case one party to the contract defaults. Lincoln provides some exceptions for agricultural and other commercial companies but still requires them to raise money for trades.

"I believe this is the strongest Wall Street reform bill that we have seen to date," Lincoln said Tuesday. "Our bill is real reform. It will bring 100 percent transparency to our financial markets. It'll prevent future bailouts, and it will protect the folks on all of our Main Streets."

[earcandle]

3. Why new legislation? Glass Stegall works fine! We already approve it. And we need to lock up

those who deregulated it so that this disaster could occur.

Making new rules waters down the old ones.  The ones that
worked.

Talk to you local rep.  Get Glass Stegall back in place. 
Trust no one.

[TomCADem]

4. Glass-Stegall Was Repealed - You Need A New Law

Call it Glass-Stegall II if you want, but there currently is not a Glass-Stegall law on the books.

[Dr Fate]

2. Almost sounds to me like they are cooperating b/c they want to water it down.

then Blue Dogs can side with the GOP and pretend that they are making concessions for the sake of bi-partisanship...

Hmmm. Now I see why the more conservative DEMS wanted the GOP to be on board w/ HCR at first...

[TomCADem]

5. Well, McConnell Was Demanding The Removal Of Derivatives Regulation. We'll See...

[Dr Fate]

6. I would not be suprised if he gets that and much more.

I liked it better when they opposed us and the conservative DEMS had to openly side w/ the GOP & corporations.

We actually got to see everyone's cards during HRC, which is rare, I guess.

[TomCADem]

7. So, You Are Saying That Democrats Backed Down In This Fight?

McConnell and Cornyn have been busily fund raising while financial firms have opposed derivatives regulation. Are you suggesting that the bill will be stripped of regulations relating to derivatives?

Will we see Wall Street banks supporting the bill perhaps?

http://www.nytimes.com/2010/04/17/business/17derivatives.html

President Obama emphasized his desire for strong derivatives legislation, saying that he would “veto legislation that does not bring the derivatives market under control and some sort of regulatory framework that assures that we don’t have the same kind of crises that we’ve seen in the past.”
* * *
That would rule out any securities firm that also owns a bank, like JPMorgan Chase, or a Wall Street firm like Goldman Sachs, which became a member of the Federal Reserve system during the financial crisis to gain access to the Fed’s discount window, its vehicle for short-term, emergency borrowing.

As details of the proposed bill have filtered out this week, large banks and Wall Street firms have lined up to oppose it. Trading in derivatives is one of Wall Street’s most profitable lines of business. But many companies also have opposed some of the restrictions, saying they will raise their cost of doing business.

Under the legislation, most derivatives trades would have to be cleared through a middleman to ensure that the bankruptcy of one party to a contract would not put the other party out of business. In clearing, both parties are required to put up a certain amount of cash collateral and possibly add to it depending on short-term changes in the value of the contract.

[Dr Fate]

8. I just keep thinking back to how HCR played out.

What people said they were for and and how hard they fought for it were often 2 diff. things...

I also remember how hard all the conservative DEMS tried to get the GOP on board w/ HCR, and how they put that concept above what the DEM base wanted.

I want DEMS to pass a bill with teeth, and I dont see why we even need a lot of GOP support unless it is so the Blue Dogs will have cover for more conservative friendly aspects of it...

LOL! Then again, I realize that I'm getting ahead of things here!

[msongs]

9. dems rolled over on health scare, will they let lobbyists write finance reform too? hmmm nt

[Dr Fate]

10. I think DEMS might let corporate lobbyists write the bill-certainly to a degree.

I could be wrong, but is there any bill in recent history where this is not the case?

[Name removed]

11. Deleted message

Message removed by moderator. Click here to review the message board rules.

[Dr Fate]

13. So I'm a Republican if I admit that Lobbyists influence congress? LOL!

You mean Lobbyists- in DC? IN CONGRESS??? Oh my God!

Are you being serious? LOL!

I dont know much about this Luntz guy and I could care less about his perspective-my guess is he gives the GOP a free pass for lobbying influence on their side.

[anigbrowl]

12. They're on the back foot

They would have loved to hit the administration over the SEC lawsuit, but now Britain and Germany have GS in their sights too (the UK regulatory agency pulled the securities license for Fabrice Tourre on tuesday). Plus the IMF is expressing approval for the idea of taxing banks more heavily: http://www.nytimes.com/2010/04/21/business/global/21imf.html?src=busln

Opposing the reform bill like they did on healthcare is political suicide for the GOP. They'll likely cave and seek to attack the administration on something else, crying on how bipartisan they were on fiscal reform.