This post originally appeared on the Daily Kos.
As entirely expected, the Republicans continued their crusade for a backroom deal on Wall Street reform, and voted again to block debate on it. The motion failed 57-41, and Ben Nelson voted with the Republicans, again. In light of this tactic from the Republicans, Simon Johnson has a very good proposal
for Senate Dems.
If the Democratic leadership becomes fed up with Republican stalling – or otherwise sees an opportunity to paint the Republicans as completely obstructionist, they could actually strengthen the bill.
For example, including something like the Brown-Kaufman amendment (or otherwise addressing the issues posed by our six megabanks) would make it easier for people to understand what is at stake. To win on this issue in November, the Democrats may need to simplify their message and make it more powerful. Some relatively pro-Wall Street Democrats are reluctant to do this, but if the Republicans stand united, nothing will pass – so why not propose something stronger that will go down to clear and memorable defeat, particularly after a searing debate?
The Republicans are not the only ones who can maneuver here. By delaying any progress, they are creating an opportunity within the Democratic side to find ways forward that are not entirely designed by Senator Dodd....
Republican stalling tactics have, in effect, introduced a greater element of randomness into the process.
The Republicans obviously want to slow reform or make it change direction. They should be careful what they wish for.
It's turning the thumb screws on Republicans, and it makes sense. It's good politics, and even better policy to make this as tough a bill as possible. But it doesn't absolutely have to follow that that would make the bill fall in "clear and memorable defeat." The questioning by GOP Senators in today's Goldman Sachs hearing shows that they very much recognize the political value of being tough on Wall Street. Dems are in a position to take advantage of that on this bill. Dems can negotiate from a position of strength on this one, and have a number of negotiating chips. TWI's Anne Lowery has a good run down
on these basic issues, a handful of which Republicans are supporting.
Audit the Fed. Last year, Rep. Ron Paul (R-Texas) introduced a House bill to audit the Federal Reserve. It garnered 313 cosponsors. A similar measure in the Senate, a budget amendment sponsored by Sen. Charles Grassley (R-Iowa),passed 95 to 1. But a strong provision did not make it into the final Senate legislation.... Sen. Bernie Sanders (I-Vt.) is sponsoring an amendment that would open up the Fed to an Government Accountability Office audit. The amendment has the stated support of Sen. Russ Feingold (D-Mich.) and Sen. Jim Bunning (R-Ky.), among others, and is expected to come up.
End too big to fail by capping bank size. Sanders alsowrote a measure to break up the banks that failed to make it out of the Senate Budget Committee last week. But the notion of breaking up big banks is a popular one, and sure to come via amendment.... Sen. Sherrod Brown (D-Ohio) and Sen. Ted Kaufman (D-Del.) last week introduced the Safe Banking Act, which they plan to offer as an amendment to the Dodd bill....
Reinstitute Glass-Steagall provisions. Another popular way to effectively limit bank size is to return to the Depression-era Glass-Steagall rules. The Glass-Steagall Act, mostly repealed in 1999, prevented banks from having both commercial and investment banking arms — as, for instance, J.P. Morgan Chase does today. Sen. Maria Cantwell (D-Wash.) and Sen. John McCain (R-Ariz.) plan to introduce an amendment reintroducing the rule.... Shelby, Sen. Johnny Isakson (R-Ga.) and Sen. John Cornyn (Texas) also support the measure....
An effectively similar, if functionally different, way of breaking up banks or limiting their size is by instituting the Volcker Rule — which bars banks from speculating with their own money by “prop trading” or investing in hedge funds. The current Dodd bill promises to institute something like the Volcker Rule, creating a commission to look at how to institute it down the road. But Sen. Jeff Merkley (D-Ore.) and Sen. Carl Levin (D-Mich.) have ready a measure introducing a more-stringent version immediately.
Fix the ratings agencies. The Dodd bill does little to fix the credit ratings agencies, whose profligate stamping of AAA ratings on collapsing subprime mortgage-backed securities helped to stoke the crisis.... Sanders has said he will introduce new language to strengthen oversight over and regulation of the agencies....
Keep the Fed the regulator of little banks. Under the Dodd bill, the Federal Reserve would have oversight only of banks with more than $50 billion in assets. But Sen. Kay Bailey Hutchison (R-Texas) and Sen. Richard Shelby (R-Ala.) oppose this measure and want the Fed to have oversight of small banks as well — ensuring that the Fed does not become overly concerned with the business of big banks and ensuring that it keeps an eye on the small financial companies that can be the bellwether of bad economic times. Hutchison has said she plans to “certainly have an amendment that assures that state banks and community banks will be able to have access to be members of the Federal Reserve.”
Make the Consumer Financial Protection Agency truly independent. Sen. Jack Reed (D-R.I.) has promised to introduce amendment moving the Consumer Financial Protection Agency outside of the Fed.
Improve hedge fund reporting. Reed also plans to introduce an amendment closing a loophole in the Dodd bill that might let some private equity firms, venture capital firms, and hedge funds avoid registering with the Securities and Exchange Commission.
These are all ways that the bill could be strengthened, many of which at least some Republicans are fully behind. So Dems should go for broke. That means a couple of things: no deals between Dodd and Shelby
to limit amendments. It also means continuing the pressure, with UC votes every single day.
You can help. Make Calls to Congress using this tool
. Sign this petition
calling for a strong, independent CFPA. Join the virtual march on Wall Street
on Thursday. And tell your Democratic Senators to keep the pressure on.