Democratic lawmakers dug in again on Thursday to break off just enough support from Republicans to keep an overhaul of the U.S. financial system moving in the Senate.
The bill crafted by Senator Christopher Dodd, chairman of the Senate Banking Committee, won approval at the committee level on Monday on a narrow vote on straight party lines. Dodd now must secure the backing of a handful of Republicans so the bill can overcome procedural roadblocks.
According to congressional aides, that will mean striking a balance between compromise and cooperation with Republicans who are willing to negotiate with Dodd in a delicate process that is expected to continue for a week or two.
A key Republican made clear on Thursday that he still has serious problems with Dodd's bill. Senator Richard Shelby, the top Republican on the Banking Committee, said the measure fails to end the problem of large financial firms being viewed by the markets as too big to fail.
Shelby, in a letter to Treasury Secretary Timothy Geithner, also said the bill does not ensure that taxpayers are protected from the costs of bailing out failing financial institutions. A copy of the letter was obtained by Reuters.
Shelby also said the bill gives the Federal Reserve emergency lending authority that is far to open to abuse and creates a backdoor way for Treasury and the Federal Deposit Insurance Corp to prop up failing firms.
Shelby, however, said he believes broad bipartisan support could still be attained on financial reform legislation. He and Dodd were scheduled to have dinner together on Thursday night.
The Dodd bill takes aim at addressing concerns over how to maintain the stability of the financial system, regulate the risky financial instruments that have been blamed for contributing to the financial crisis, and protect consumers from risky financial products that have also been blamed for their role in the crisis.
Dodd told reporters on Thursday that the bill's prospects had been boosted by Democrats' victory this week on healthcare reform.
The healthcare thing kind of changed the atmospherics around here, he said in a Capitol hallway.
Republicans who were frustrated by their party's broad obstructionism on a range of issues would be emboldened by that approach's evident failure in the healthcare fight, he said.
A number of Republicans went along with the strategy of just saying no, but were never happy with it, Dodd said.
If it worked, they would go along. But they saw it fail and now they've had enough of it and they really want to be involved in crafting things, he said.
The Senate Banking Committee, after being approved by a 13-10 party-line vote on Monday, is now headed to the full Senate for debate. That will not happen until April, however, after lawmakers return from a two-week Easter holiday break.
But even before debate can start, some Republican support must be captured by Democrats, who control only 59 votes in the 100-member Senate. They will likely need 60 votes to overcome procedural hurdles likely to be raised by Republicans.
Dodd's message on building on the strength of the victory on healthcare reform was voiced by Democrats across Capitol Hill as they refocused with gusto on the long-delayed financial regulation overhaul initiative, which has cast a cloud of uncertainty for months over the financial services sector.
As we go forward, we will see if the Republicans are willing to reform Wall Street, said House of Representatives Speaker Nancy Pelosi at her weekly news conference. If they don't want to regulate Wall Street, we do and we will. We hope it will be bipartisan ... We must have regulatory reform.
POLL SHOWS SUPPORT FOR REFORM
A national poll released on Thursday said 59 percent of Americans want Congress and the president to reform the financial system now.
Half of the 1,000 people surveyed said they would feel more favorable toward their member of Congress if he or she voted in favor of tighter oversight of financial firms.
The Pew Financial Reform Project said the March 4-8 survey was conducted by a bipartisan team questioning people who were highly likely to vote in 2010.
Democrats are gambling that poll results such as these will convince Republicans to put some distance between themselves and an army of bank and Wall Street lobbyists working to weaken and kill reform measures that threaten bank profits.
President Barack Obama signed healthcare reform into law this week after it was approved by Congress over the objections of Republicans who fought for months to block it.
(Additional reporting by Thomas Ferraro and Karey Wutkowski; Editing by Leslie Adler)