Republicans agreed on Wednesday to allow a Senate debate to begin on a financial reform bill as Democrats signalled their willingness to scrap plans to charge big financial companies $50bn to pay for a resolution fund.
Although Republicans have portrayed the $50bn pot as a “bail-out fund” to benefit Wall Street, the potential removal of the upfront levy is still good news in the short-term for large US financial institutions. If changes to the legislation go as expected, they would instead be liable to repay the government after-the-fact for costs associated with winding down a failing systemically important company.
“I’m very pleased that, after a few days of delay, it appears an agreement may be in hand to allow this debate to move forward on the Senate floor on this critical issue,” said President Barack Obama during a visit to Illinois.
Senators, aides and officials disagreed last night on the extent of a bipartisan deal. Several Democrats said there was nothing new on offer and that they had always been willing to give up the $50bn fund. They said Republican unity had simply splintered under pressure. Republicans, meanwhile, claimed victory on the fund front.
Mitch McConnell, Republican leader in the Senate, thanked both his party colleagues and Ben Nelson, a senator from Nebraska and the lone Democratic opponent to the bill, for “giving us the opportunity to improve the underlying bill”. He added: “We have many amendments that we intend to offer.”
Earlier, Republicans had blocked debate on the bill for the third day in a row, prompting Democrats to threaten an all-night Senate session to highlight Republican intransigence.
Democrats have brought up the bill each day this week only to have it blocked by Republicans and Mr Nelson. They needed 60 votes but achieved a maximum of 57 before Republicans lifted their opposition on Wednesday.
Disagreements persist over the scope of a proposed Consumer Financial Protection Bureau and new derivatives rules, which will be the subject of a flurry of amendments as members of both parties try to shape the legislation.
Both parties cited Goldman Sachs in support of their positions. Mr McConnell pointed to comments by Lloyd Blankfein, Goldman chief executive, as evidence the Democrats were promoting legislation that benefited Wall Street. Democrats said Mr Blankfein only expressed qualified support for the legislation.
Chris Dodd, chairman of the Senate banking committee, cited both scrutiny of Goldman Sachs, which has been charged with fraud by the Securities and Exchange Commission, and the debt crisis in Greece as reasons to move forward.