Sen. Scott Brown, R-Mass., said today he will support a financial regulatory revamp, bringing supporters within one vote to send to President Obama that biggest overhaul in banking regulations since the Great Depression.
While the bill is not perfect, it includes "safeguards to help prevent another financial meltdown, ensures that consumers are protected, and it is paid for without new taxes," Brown said in a statement.
Brown praised negotiators for dropping a pay-for that would have imposed an $18 billion fee on large financial firms. Instead, the package will end the $700 billion Troubled Asset Relief Program early and boost the minimum premiums that large banks have to pay into the FDIC's insurance fund to comply with pay-as-you-go budget rules.
"As a result, it is a better bill than it was when this whole process started," Brown said.
Republicans argue that the new offsets are problematic and rely on budget gimmickry. Sen. Judd Gregg, R-N.H., has noted that ending TARP will not have an effect because the Obama administration is not likely to use any more such funds before the program expires on Oct. 3 because of a political backlash.
Brown's support was expected after he had negotiated with Senate Banking Chairman Christopher Dodd and House Financial Services Chairman Barney Frank for easing "Volcker rule" provisions in the measure that limited banks from investing in hedge funds and private equity. The language was named after its architect, former Federal Reserve Chairman Paul Volcker. Brown had feared the provisions could hurt Boston financial groups.
Sen. Susan Collins, R-Maine, has said she is likely to support the measure, which means that Brown's endorsement brings the number of votes supporting the conference report to 59. All Democrats except Sen. Russ Feingold of Wisconsin support the conference report. The House passed it, 237-192, on June 30, and it could come up for a vote this week in the Senate.
GOP Sens. Olympia Snowe of Maine and Chuck Grassley of Iowa remain undecided on the measure. A Grassley spokeswoman said today he was still looking at the substance of the legislation.
Proponents believe Snowe's support is now more likely since Dodd included in the bill language of hers that would allow small businesses to have a greater say on rules proposed by a new Bureau of Consumer Financial Protection.
Democrats have been forced to secure three GOP votes for passage after the death of Sen. Robert Byrd, D-W.Va., and the delay by West Virginia Gov. Joe Manchin in appointing an interim replacement.
Passage of the measure is the top legislative priority for the Obama administration, which wants to show it is getting tough with Wall Street firms that were the cause of the 2008 banking crisis and setting the foundation for financial stability that will aid an economic recovery. The measure also would give regulators the power to take over firms and liquidate them to avoid federal government bailouts.
In addition, the measure would rein in the over-the-counter derivatives market, where American International Group placed bets on the mortgage market that caused its downfall.
This article appears in the July 17, 2010, edition of National Journal Daily.