Financial regulatory reform is postponed, as Senate Republicans united yesterday to deprive Democrats of the votes needed to start debate on a bill out of the Banking Committee. However, debate on the bill could begin as soon as this week.
Democrats needed 60 votes to begin the debate, but only 57 senators voted to take up the bill, while 41 voted against it. All Republicans voted against the bill. Not voting were Sens. Christopher Bond, R-Mo., and Robert Bennett, R-Utah, who were absent. They would likely have voted against taking up the bill.
Despite yesterday’s procedural and rhetorical setbacks, both sides expressed confidence that a financial regulation overhaul will be passed. The Senate bill would impose tough new rules on banks, hedge funds and derivatives trading, among other items. As written, it would require hedge funds managing $100 million or more to register with the Securities and Exchange Commission. It also includes the so-called Volcker rule, which would bar bank holding companies from owning, investing in or sponsoring hedge funds or private equity funds.
The bill would also empower regulators to unwind financial institutions that have grown “too big to fail” and create a new consumer financial products protection agency. There would also be new rules governing over-the-counter derivatives, securitization and credit rating agencies.
There are differences between the House bill, which has already passed, and the Senate proposal, which would have to be worked out if the latter is passed. The House version requires hedge funds with $150 million or more to register and does not include the Volcker rule.