WASHINGTON – WASHINGTON (AP) — House and Senate lawmakers began assembling a massive financial regulation bill on Thursday, dividing sharply along partisan lines as Democrats vowed to fend off efforts to weaken its major provisions.
"This is a very strong bill and it is time we get it to the president's desk for his signature," Senate Banking Committee Chairman Christopher Dodd said, kicking off a meeting of lawmakers selected to blend House and Senate versions into one bill.
Such a House-Senate panel, called a conference committee, is a relatively rare occurrence in Congress. Though it is the textbook means of reconciling competing bills, congressional leaders in recent years generally have bypassed conferences and worked out legislative differences in private.
With Democrats aiming to wrap up their work before the end of the month, banks, retailers, consumer groups — even car dealers — all mustered a final lobbying thrust to influence the 1,900-page legislation.
The Obama administration, meanwhile, looked for quick completion of the bill, eager to have a House-Senate agreement in time for President Barack Obama's trip to Toronto later this month to meet with the Group of Twenty nations. The world's largest economies are working to coordinate their financial regulatory schemes.
Expedience could run headlong into a potentially chaotic process. Rep. Barney Frank, D-Mass., who will chair the conference committee, promised efficiency.
"I will put forward one qualification for this job — my impatience," he joked. "I think it will serve us all very well."
The far-reaching regulatory bills aim to prevent a recurrence of the financial crisis that precipitated the 2008 recession, from which the country is only now recovering.
The bills would allow regulators to liquidate large, failing financial companies, create a new consumer protection entity to safeguard borrowers and impose new regulations over complex securities that had previously traded in shadow markets.
Republicans cast the bill as an overreaching effort to control the private marketplace and complained that Democrats failed to include any regulation on the giant, government affiliated mortgage companies Fannie Mae and Freddie Mac.
"The American economy will once again become the laboratory for another grand Democrat experiment in big government and central management," Sen. Richard Shelby, R-Ala., said.
Much of what ends up in the final bill will still be negotiated behind closed doors, mainly by Democrats. But Dodd and Frank vowed to hold public votes on final changes in the legislation.
From the outset, though, House and Senate Democrats privately worked out the base bill, relying mainly on the Senate-passed version, adding technical changes and incorporating some provisions from the House bill. None of the changes affected the central elements of the legislation.
Still, Shelby complained that that House-Senate agreement came with no Republican participation.
"It appears we're off to a rocky start," he said.
Frank later gave a boost to a Senate-passed provision to limit the fees merchants pay to banks and credit card networks when customers pay for goods or services with debit cards. Led by credit unions and community banks, the financial industry has been lobbying heavily against the measure, which passed the Senate 64-33.
"With that very strong vote in the Senate, I don't think the House will try to resist that," Frank said, adding, though, that the provision could be modified.
One of the key issues facing the conference is a tough provision that would force banks to spin off their lucrative derivatives business. Its leading proponent is Sen. Blanche Lincoln, D-Ark., a member of the conference.
Obama administration officials and a number of banking regulators say Lincoln's provision goes too far. But on Thursday Lincoln delivered a strong defense of her proposal, which primarily would strike at the nation's largest financial institutions, including Goldman Sachs and other firms that dominate Wall Street.
"It is this economic activity that contributed to these institutions growing so large that taxpayers had no choice but to bail them out to prevent total economic ruin," she said. "This provision makes clear that derivatives dealing is not central to the business of banking."
Frank and Dodd have voiced a preference for strengthening other limits of bank activity. But Lincoln's support is key in the conference. With the Senate represented by five Republicans and seven Democrats, a single Democratic defection would stall the bill.
Lincoln is coming off a surprise primary election victory this week over a Democratic opponent backed by liberal groups and labor unions. Lincoln campaigned by highlighting her opposition to Wall Street, and her success appears to have given her proposal new life.