In our ongoing effort to track the financial-reform legislation, currently on the Senate floor, I'll do regular roundups of various amendments attached to the bill. Here's what passed yesterday:- The Boxer amendment: This amendment essentially says, "no bailouts!" by requiring firms in receivership to be liquidated. The politics of this amendment are everything; substantively, the actual content of the bill already ensures there are no bailouts. It passed 96 to 1, with Arizona's Jon Kyl voting against.
- The Shelby-Dodd amendment: We discussed this amendment yesterday; it removes the $50 billion liquidation fund from the mechanism to resolve failed banks and makes a few other fixes to the bill designed to plug holes in the resolution mechanism and entice Republicans to support the bill. Some notable changes are the need for Congress to approve debt guarantees like the ones that expanded the Federal Reserve's balance sheet during the crisis and empowering regulators to ban certain "culpable directors and managers" of failed firms from working in the financial sector. It passed 93 to 5, with Republican Sens. Coburn, Cornyn, DeMint, Hatch, and Democratic Senator Dorgan voting against.
- The First Snowe amendment: Maine Sen. Olympia Snowe's first amendment strikes language requiring banks to "report from each deposit-taking facility, including each individual automated teller machine, a record of the number and dollar amount of the deposit accounts of customers; a geo-coding, by census tract, of the residence or business location of each customer; and a record of whether each customer is transacting commercial or residential business." Snowe's argument is that this is an undue regulatory burden and raises privacy concerns. While you could imagine how that data would be useful to learn about America's financial behavior, this is a fair point. It passed on a voice vote.
- The Second Snowe amendment: Snowe's next adjustment to the bill is a technical fix to ask consumer regulators to consider seasonal income, from a small business like a farm, for instance, when creating standards for mortgage lending. It passed on a voice vote.
All in all, a pretty clear attempt to tee up a bipartisan bill: Early, politically popular fixes and two chances to invest Snowe, a key target in Democratic efforts to gather 60 votes for the bill, in seeing the legislation pass.
Meanwhile, today the Senate will consider an amendment from Sen. Jon Tester that would change the way the FDIC charges banks to keep its insurance fund fully solvent. Rather than charging a percentage of assets, the Tester Amendment would require the FDIC to assess liabilities; a shift that would result in the larger, most leveraged banks paying a larger share of the insurance fund relative to smaller banks, which tend to get their funding from deposits, not the capital markets. This vote will give observers a chance to understand where senators stand vis-a-vis the divide between large banks and small.
We'll also see an attempt from Shelby to weaken consumer protection by doing away with an independent consumer regulator and instead creating a new division within the FDIC, but what we need is an independent, accountable consumer agency. The vote on this amendment will be a telling measure of each legislator's commitment to real consumer financial reform. The White House has even taken the unusual step of attacking the amendment directly with a blog post by communications director Dan Pfeiffer.
Finally, the last item of the day is Sen. Bernie Sanders' Fed-auditing amendment, which promises to be a humdinger. Will the vaunted alliance of left and right overcome establishment opposition to this commonsense measure? Or will comity prevail in an effort to keep the bill noncontroversial? It will be very interesting to see who votes where on this, but even more so, whether leadership is working actively to dissuade senators to support the bill.
-- Tim Fernholz
