Future of Financial Regulation Bill Grows Murky

What if you pulled an all-nighter in college, only to have the professor tell you your work wasn’t good enough and demand a re-write of your paper?

That could be the fate of the House and Senate on a massive financial regulation bill to restructure the banking and lending industries.

Conferees from the House and Senate met for the past three weeks trying to reconcile differences in a financial regulatory bill approved by both chambers. A conference committee is where lawmakers meet to forge a final measure before it goes to the president. The conferees met all day last Thursday, finally finishing the meeting at 5:39 Friday morning.

But, when lawmakers turned in their assignment, the prof handed it back with the Congressional equivalent of “Please see me” scribbled across the top in red ink.

The problem is finding the votes to pass the final bill.

“I think there is a lot of doubt in the Senate,” said House Minority Whip Eric Cantor (R-VA).

Even a top Democrat appeared skeptical of the Senate.

“I don’t know that the Senate has faith in the Senate,” said House Majority Leader Steny Hoyer (D-MD) when asked if he had faith the Senate would approve the package.

Support for the bill hinges on the Senate’s ability to conjure up 60 votes to avoid a potential GOP filibuster. And two key factors potentially dashed chances for that. First, Sen. Robert Byrd (D-WV) died Monday. Then Sen. Scott Brown (R-MA) penned a letter to House Financial Services Committee Chairman Barney Frank (D-MA) and Senate Banking Committee Chairman Chris Dodd (D-CT) expressing his reservations about a $19 billion bank tax that was included in the bill during the conference committee.

“This tax was not in the Senate version of the bill, which I supported,” Brown wrote. “If the final version of this bill contains these higher taxes, I will not support it.”

Under the plan, the government would levy a tax on large banks for five years to cover the costs of implementing the legislation.

There were problems in the House, too.

“I think you will see robust opposition,” said Cantor when asked about potential GOP support for the package.

Meantime, many Democrats implored the House to wait until the Senate first cobbled together the votes to pass the bill. Many House Democrats are leery of taking a tough vote on an issue that could die in the Senate.

“My view is this is not a ‘walking the plank vote,’” said Hoyer when asked about potential problems with Democrats approving the measure. “I think it is walking with the American people.”

Despite the Congressional machinations, President Obama was unmoved.

“I'm confident that, given the package that has been put together, that senators-- hopefully on both sides of the aisle-- recognize it's time we put in place rules that prevent taxpayer bailouts and make sure that we don't have a financial crisis that can tank the economy,” Mr. Obama said.

Rumors spread around the Capitol Tuesday afternoon that despite last week’s all-nighter,

conferees may have to tweak the legislation to score the necessary votes to pass the package through both chambers.

“The trouble is fixing one thing and then breaking another,” said one senior House source.

One idea is to find other revenue streams to offset the bank tax. A senior Congressional aide said lawmakers were discussing adding a fee to the FDIC fund. That’s the program set up to insure most consumer deposits at banks through the Federal Deposit Insurance Corporation. But legislators who represent poor constituents don’t like that plan, arguing it’s a tax on consumers.

Another option on the table is putting an early end to the Troubled Asset Relief Program, known as TARP. The government created TARP in the fall of 2008 to rescue struggling financial institutions. The $700 billion measure was controversial and lawmakers would like to euthanize it soon. But the TARP option could only save $16 billion.

President Obama told Congressional leaders long ago that he wanted the final version of the financial regulation bill on his desk by July 4. But that’s now looking less likely. Byrd is scheduled to lay in repose on the Senate floor Thursday. That prevents the Senate from any action that day. And many lawmakers from both the House and Senate want to travel to West Virginia Friday for Byrd’s funeral.

Congress is slated to go on its July 4th break on Friday.

- Fox 's Rich Edson, Brett Baier and Trish Turner contributed to this report.