Much will be riding on a Senate vote scheduled for late Monday afternoon.
That one vote will demonstrate whether Democrats can advance the largest overhaul of financial regulation since the Great Depression over the strenuous objections of Republican leadership and strong opposition by deep-pocketed Wall Street executives.
But some close to President Obama say there will be even more weight on that one roll call by saying its not only about “fixing Wall Street. It’s also about fixing Washington.”
Democrats have spent all week pushing back at Senate Republican Mitch McConnell of Kentucky, who repeatedly denounced the financial reform package on the Senate floor, hoping to unify GOP opposition to the legislation in a manner similar to the earlier united Republican opposition to healthcare reform bill.
The financial industry, too, has been vigorous in trying to derail the new regulations, including what would be some of the first rules on the $600 trillion derivatives market, which is one of the most shadowy and least-regulated parts of Wall Street. Sen. Blanche Lincoln (D-Ark.) has moved a bill to create new derivatives regulation, with the hope that her bill will become part of the larger financial reform legislation to be voted on next week.
About 25 high-priced executives came to Capitol Hill Tuesday to lobby against the new rules.
“Over the last week, U.S. Public Interest Research Group and state PIRGs contacted over 65 Senate offices and members not to meet with what the New York Times called a ‘swarm’ of derivatives reform opponents,” says Ed Mierzwinski, consumer director of U.S. PIRG, a Washington-based group advocating for strong new financial regulations. “PIRG staff also urged them to oppose any and all proposals to weaken the tough new regulations proposed by Senate Agriculture Committee Chair Blanche Lincoln (AR).”
Lincoln’s bill would open the derivatives market to new transparency, making easier for regulators to spot fraud. The legislation also would prohibit the Federal Reserve and Federal Deposit Insurance Corporation (FDIC) from providing any federal funds to bail out Wall Street firms who engage in risky derivative deals.
Mierzwinski is calling on the Senate to reject the efforts of the anti-reform executives.
“Congress won’t be able to rein in Wall Street unless it insists on comprehensive regulation of the shadow derivatives markets, tough provisions that end taxpayer bailouts, and establishment of a strong and independent Consumer Financial protection Agency to protect consumers,” he adds.
While President Obama strongly supports financial reform, Democrats close to him are going even further by saying that the fate of the regulatory overhaul also will determine whether special interests, such as the bankers, can continue to hold sway in Washington.
“For too long, it’s been a place where special interests have set the rules and petty partisanship has stood in the way of progress. As the President said Thursday, ‘We can and must put this kind of cynical politics aside,'” Mitch Stewart, director of Organizing for America (OFA), says in an email to supporters. An organization within the Democratic National Committee, OFA was built out of Obama’s 2008 campaign operation.
“Thanks to strong leadership from the President and Democrats in Congress, the gridlock is starting to crack, and Republicans are slowly giving signs that they’ll come on board. The Senate has even scheduled a preliminary vote for Monday at 5:15 p.m,” Stewart adds.
Stewart asks supporters to sign letters in support of reform online at barackobama.com.
The publisher of the news site On The Hill, Scott Nance has covered Congress and the federal government for more than a decade.