WASHINGTON — While Senate leaders said they would like to complete a vote on regulatory reform legislation this week, that goal is looking increasingly unrealistic.
The chamber passed one major amendment to audit the Federal Reserve Board, but left other pivotal issues unaddressed, including measures that would force banks to spin off their swaps desk, strengthen federal preemption language and ban proprietary trading by banks.
Though Senate Banking Committee Chairman Chris Dodd said that a vote on derivatives may drift into next week, Senate Majority Leader Harry Reid said he remained committed to completing work on the bill this week.
"I hope we can pass this bill. … I'd like to do it this week. I understand that's hard to do, but we're going to try to do it," the Nevada Democrat said in a press conference.
Dodd told reporters that he was waiting to hear back from key colleagues, particularly Sen. Richard Shelby, the lead Republican negotiator, on whether they would support a revised version of the bill that includes a number of amendments from both Democrats and Republicans.
"We submitted language last Saturday. … I don't have an answer back yet," Dodd said. "We are trying to get answers. I know members want time to be heard and I want to give them time. But if I submit something to you on Saturday and this is Tuesday and I can't get an answer, I'm losing a little faith that you are sincere about this."
Dodd declined to go into detail about what would be included in his revised bill and whether he would support an amendment from Sen. Tom Carper, D-Del., to strengthen national bank preemption. He also gave no sign of where he was on a controversial derivatives provision that would strip banks of such business. "I haven't seen it yet," Dodd said of the Carper amendment. "I am dealing with one amendment at a time."
On derivatives, Dodd gave a similarly circumspect answer.
"There's a lot of talk going on about that. We have a lot of other issues to resolve before we get to that one," he said.
But he indicated a vote on an amendment from Sens. Carl Levin, D-Mich., and Jeff Merkley, D-Ore., to bolster the Volcker Rule ban on proprietary trading was likely this week.
"A lot of work has gone into it over the weekend. I think it's in pretty good shape, but there are members who have concerns about it," Dodd said. "There will be a vote I think this week on it."
Levin boasted Tuesday of the steady and growing support for his amendment. "We have a lot of co-sponsors and a lot of support including Volcker, which is very important, a lot of other small-business groups are supporting it, community bankers are supporting it," he said.
Industry lobbyists speculate that adding a tougher Volcker Rule from Levin could be a trade-off for removing the swaps provision from the derivatives part of the bill. Some observers said Democrats are delaying watering down that provision until its author, Agriculture Committee Chairman Blanche Lincoln, gets past a primary challenge on May 18.
Levin said he supports Lincoln's provision, but said his amendment would give regulators discretion to essentially do the same thing. "We sliced it in a different way than she does," he said. "It's kind of technical, but that's the bottom line."
The major action on regulatory reform was the Senate's 96-to-0 adoption of a stripped-down amendment from Sen. Bernie Sanders, I-Vt., to audit the Fed's emergency lending actions since the financial crisis erupted in 2007. (See related story.)
The Senate also rejected, by a 62-to-37 vote, a more sweeping amendment from Sen. David Vitter, R-La., that would continually expose the Fed's decision-making, including monetary policy to scrutiny by the Government Accountability Office.
Republicans, meanwhile, continued their likely futile quest to address Fannie Mae and Freddie Mac in the bill. At a press conference with Sen. John McCain, R-Ariz., Shelby said it would be "reckless" not to address the government-sponsored enterprises in the bill.
McCain's amendment, which would force the government to privatize or unwind the GSEs, failed 56 to 43.
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