Senate Republicans Reject Democrats' Financial Reform Bill...For Now

Financial regulatory reform will have to wait until another day, as Senate Republicans, on a vote of 57-41, hung together Monday to deprive Democrats of the votes needed to start debate on a bill out of the Banking Committee, this as the Majority worked to harness the anger Americans feel toward Wall Street for causing the 2008 meltdown of the U.S. economy. One Democrat, Ben Nelson of Nebraska, joined Republicans in defeating the measure.

"Democrats stand for bringing more accountability and transparency to Wall Street. As far as I can tell, the only thing Republicans stand for is standing together," Sen. Democratic Leader Harry Reid, D-NV, chided.

"And Democrats have the nerve in this debate to say that we're the ones who are being dishonest. All of us want to deliver a reform bill that will tighten the screws on Wall Street, but we're not going to be rushed into another massive bill based on the assurances of our friends on the other side," Republican Leader Mitch McConnell, R-KY, responded.

The political tit for tat has continued for weeks, all while bipartisan negotiations have gone on just beneath the radar. But those negotiations have still not born fruit. In fact, in a meeting with reporters, GOP Banking Committee staff sounded less optimistic that a deal would be found, speaking as much about a GOP alternative bill that could be introduced as early as Tuesday, according to one senior GOP leadership aide.

Still, Dodd and Shelby continued to meet Monday, emerging from a half-hour long session without staff, with Shelby saying, ""We're making progress. I think we'll get there."

All of this is occurring against a backdrop that is increasingly difficult for Republicans, as Wall Street giant Goldman Sachs comes under the federal microscope for possible fraudulent activity surrounding its mortgage securities trading. Top executives will appear before a Senate investigative panel Tuesday, and the Securities and Exchange Commission recently announced its own probe of the bank's financial activities.

Democrats made it clear that they will continue to make political hay out of Republican objections to debating a bill. When asked what happens after the vote tonight, should Republicans hang together, Dodd said emphatically, "We'll go back and hopefully the leader will keep filing cloture motions or bringing up motions that will allow us to get there."

Freshmen Democrats hoped to push the confrontation further with Republicans on this measure, vowing to hold the Senate in late on Monday to highlight GOP objections even further. Democrats will, at various intervals, attempt to get unanimous consent to move onto the bill, prompting a necessary GOP objection, this according to Democratic leadership aides.

Still, even moderate Republicans, like Olympia Snowe of Maine, who is considered the best prospect for a bipartisan agreement, said there's more work to be done, turning the Democrats' political argument on its head. "I support strong reform legislation so that financial institutions can never again bring our economy to the brink of collapse. Yet, regrettably, the scales of this current bill are tipped to protect Wall Street at the potential expense of Main Street," Snowe said.

And Sen. Lamar Alexander, R-TN, went even further in co-opting an oft-repeated Democratic talking point. "I would say to my friend the Majority Leader that he’s rapidly becoming the leader of the ‘party of no’ by offering so many ‘no motions,’" Alexander said, "The vote this afternoon is one more of a record number of ‘no motions’ offered by the Majority Leader saying no to more amendments, no to more debate, and no to checks and balances on a runaway government in Washington."

If anyone is puzzling over why Reid changed his vote at the last minute to opposing debate on the Dodd bill, it's all related to a quirk in the Senate rules.  Essentially, in order to have a vote reconsidered, a member, usually a leader, must change their vote to the prevailing side.  So, while it appears Reid voted with Republicans, it was definitely not a substantive vote.  It is purely to ensure he can call up the vote later this week (likely), and have the Senate vote again on whether or not to start debate on the Dodd bill.