No deal yet on financial rules

April 26, 2010 at 12:00a.m.

Associated Press

WASHINGTON

Democrats are showing little willingness to alter financial-overhaul legislation any further and are ready for a showdown vote Monday, hoping to splinter solid Republican opposition or to cast the minority party as an ally of Wall Street.

Republican leaders seem prepared to take that risk — for now — if they can force Democratic concessions.

The top negotiators on the sweeping bill — Democratic Sen. Christopher Dodd and Republican Sen. Richard Shelby — professed to be close to a deal Sunday during a joint appearance on NBC’s “Meet the Press.” But, as Shelby said, “inches sometimes are miles.”

The two lawmakers did not have a negotiating session Sunday.

The legislation, the most sweeping effort to rein in financial institutions since the Great Depression, is approaching its end game, and Republicans and Democrats alike predict it can ultimately pass with bipartisan support.

But for now, Republicans are using what leverage they have in hopes of putting a bigger GOP imprint on the bill or removing Democratic provisions they perceive as government overreach.

Senate Republican Leader Mitch McConnell on Friday blocked Democrats’ efforts to bring the bill up for debate, setting up a vote today that will require 60 votes to move ahead. McConnell and Shelby said Sunday that without a deal with Dodd, all 41 Republican senators would vote to stall the start of debate. Shelby said a deal in time for the vote was unlikely.

Democrats said they were out of patience.

“Are we going to start the debate or are we going to shut it down and continue negotiating, negotiating, negotiating?” Sen. Sherrod Brown, D-Ohio, said on ABC’s “This Week.”

The impasse reflected differences over how to contain large, interconnected financial firms and how to liquidate them when they fail. But Democrats and Republicans also differed on how to protect consumers and how to set limits on previously unregulated exotic instruments such as derivatives.

After health care, the financial regulation legislation has emerged as a top priority for President Barack Obama. The House has already passed its version of the legislation.

Both bills would create a mechanism for liquidating large firms, set up a council to detect systemwide financial threats, and establish a consumer protection agency to police lending. The legislation also would require derivatives, blamed for helping precipitate the meltdown, to be traded in open exchanges.

Even if Democrats are unable to proceed to debate after today’s vote, Senate Majority Leader Harry Reid intends to keep pressure on Republicans. The political environment favors Democrats. Polls show a public desire to regulate financial institutions, and a recent fraud lawsuit against Goldman Sachs has created a desire by several Republicans not to be seen as obstructing Wall Street legislation.