Last night the Senate Banking Committee met and voted, on partisan lines, to approve Chairman Chris Dodd's financial-regulation bill; Republicans declined to raise their amendments in committee, preferring to save the fireworks for a floor fight. This is not a huge surprise; reporters have expected something unusual ever since the markup, which was supposed to deal with hundreds of amendments, was scheduled to begin at 5 in the evening.
I've been relatively optimistic about this bill and the prospects for improving it. I understand the idea of skipping committee fights -- heck, I've encouraged it -- to look for broader support for the bill on the floor. Given the makeup of the Finance Committee, you aren't going to get a bipartisan bill and you're not going to get much of a partisan bill, either.
Now, though, I am a little nervous about it. The rhetoric from Dodd, and from President Obama, belies the fact that this bill needs significant improvement. Especially without Republican votes, Democrats need to step up and explain why we need to make all of these concessions and compromises to what was a very strong bill without forcing votes or getting Republican support. While Obama et al. have promised to try to strengthen the bill on the floor, they also revel too much in mechanisms, like the consumer bureau within the Fed that the administration insists on calling an agency, that are weaker than they could be. What we're seeing could be exactly what I warned about last week: a cosmetic bill, not serious reform.
It's too early to judge; there is still time to improve this bill, but signs of where the Democrats will push are, intentionally or unintentionally, muddled.
-- Tim Fernholz
