–Senate Democratic Leaders Hope To Send Obama Reg Reform Bill Next Week
–Senate Dems Must Round Up 60 Votes To End Debate
–House Cleared Final Bill Last Week in 237 to 192 Vote

By John Shaw

WASHINGTON (MNI) – More weary than triumphant, Senate Democratic
leaders are hoping next week to pass the final version of financial
regulatory reform, sending it to President Obama for his signature.

In comments Wednesday, the president made it clear that he is eager
to see the regulatory reform bill reach his desk soon.

He said that he hopes the Senate “moves as quickly as possible to
finish this chapter and settle this issue.”

Last Wednesday, the House passed the most sweeping package of
financial regulatory reforms in decades on a mostly party line, 237 to
192 vote.

The Senate will take up the same bill next week.

While it will only require a majority vote in the Senate to pass
the bill, Democratic leaders will have to secure 60 votes to cut off the
debate in the upper chamber.

Senate Banking Committee Chairman Chris Dodd has said he believes
he will be able to get 60 Senate votes needed for the package.

But there is still some uncertainty where those votes will come
from.

Of the 58 Democratic and independent senators, 57 are expected to
vote for the final bill. Only Sen. Russ Feingold, a Democrat from
Wisconsin, has said he won’t vote for the legislation.

It remains unclear when a successor to former Sen. Robert Byrd will
be appointed — or elected.

West Virginia Governor Joe Manchin has said in recent days that he
supports holding a special election, possibly this fall, to fill Byrd’s
seat. That would mean the Byrd seat would be vacant when the Senate
votes on regulatory reform next week.

Four Senate Republicans voted for the Senate’s regulatory reform
bill in late May: Scott Brown of Massachusetts, Susan Collins and
Olympia Snowe of Maine, and Chuck Grassley of Iowa.

Collins has said she will vote for the final version of the bill
and Brown has signaled that he is strongly inclined to support the
bill. Snowe and Grassley have not yet said how they will vote.

Democratic leaders will need three of these four of these
Republicans to vote to end the debate on the bill.

The underlying bill would create a council of regulators to monitor
the economy for systemic threats. It would institute new regulations on
hedge funds and over-the-counter derivatives and create a Bureau of
Consumer Financial Protection that will oversee mortgage, credit cards
and other credit products.

The bill provides for expanded audits of the Federal Reserve by the
Government Accountability Office. The GAO would conduct a one time audit
of all the Fed’s emergency loan programs that were created during the
financial crisis. It would also have the authority to audit future
emergency lending and other Fed transactions, with a two year delay in
releasing the results.

The bill includes a variation of the Volcker-rule, banning banks
from proprietary trading and limiting them from investing in or
sponsoring hedge funds and private equity funds. It limits bank
investments in private equity or hedge funds to 3% of a fund’s capital.
Total investment in private equity and hedge funds can’t exceed 3% of a
company’s tangible common equity.

The legislation would push most OTC derivatives through third party
clearinghouses and onto exchanges or electronic trading systems. It
would force banks to push some of their swaps trading into subsidiaries.

Under the bill, banks will be allowed to keep their derivative
trading operations as long as they are used to hedge risk or trade
interest rates or foreign exchange swaps. The bill will give federally
insured banks up to two years to send instruments such as uncleared
credit default swaps off to a separately capitalized subsidiary.

If financial regulatory reform is passed by the Senate and signed
into law, it will represent a major legislative achievement for Obama
and congressional Democrats.

In the last 18 months, the Democratic Congress and Obama have
enacted a $787 billion fiscal stimulus bill and major health care
reform.

But there is little evidence that these achievements have eased the
concerns or anger of the American public.

Most polls show Obama’s approval has fallen significantly in recent
months and many analysts expect Democrats to lose a large number of
seats in both the House and Senate in November — and even possibly lose
their majorities in the two chambers.

** Market News International Washington Bureau: 202-371-2121 **

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