Senate vote deals procedural hitch to bank overhaul

April 27, 2010 at 12:00a.m.

Associated Press

WASHINGTON

Undaunted by a Senate setback, Democrats appeared increasingly confident Monday they will be able to take advantage of Americans’ anger at Wall Street and push through the most sweeping new controls on financial institutions since the Great Depression.

The Senate, in a 57-41 vote, failed to get the 60 supporters needed to proceed on the regulatory overhaul. One Democrat, Sen. Ben Nelson of Nebraska, joined with the Republicans.

But the evening vote was just part of a legislative ballet keeping bipartisan talks alive. At the end, Senate Majority Leader Harry Reid switched his vote to “no,” too, but that was just a maneuver that will enable him to call for a new tally as early as today.

Democrats believe that public pressure and the scent of a Wall Street scandal have given them the upper hand. Republicans themselves have taken up the Democrats’ Wall Street-bashing rhetoric and have voiced hope that a bill ultimately will pass. In that light, the path to final approval seems clearer than it ever did during the contentious debate over health care.

The financial-overhaul bill is a priority of President Barack Obama’s and, after health care, its passage would build on his legislative successes — an important political consideration in an election year. The House already has passed its version of new bank regulations.

Both the House and Senate bills, aimed at heading off any recurrence of the near-collapse of the financial system in 2008, would create a mechanism for liquidating large firms that get into trouble, set up a council to detect systemwide financial threats and establish a consumer protection agency to police lending. The legislation also would require investment derivatives, blamed for helping precipitate the near-meltdown, to be traded in open exchanges.