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GOP Searches for a Strategy on Financial Reform

With their focus still squarely on health care reform, Senate Republicans have yet to develop a strategy for navigating the politically choppy waters of financial regulatory reform, potentially ceding control of the debate to Democrats just as the issue is about to break through.

Senate Banking, Housing and Urban Affairs Chairman Chris Dodd (D-Conn.) unveiled his package Monday and plans to mark it up next week.

More so than on any other issue this Congress, Republicans appear nearly unanimous in their hope that a consensus can be reached and that the Senate ultimately produces a bill that they can support. But several influential Republicans acknowledged Tuesday that the Conference has yet to settle on a road map for financial regulation and is stuck in a wait-and-see mode.

“We do want something to be done,” said Republican Policy Committee Chairman John Thune (S.D.), who is up for re-election this year. “We just don’t know exactly yet where this is headed. And, I think a lot of our people do want to vote for something.”

Dodd’s decision to unveil his bill without bipartisan support was interpreted by Republicans as the Democrats and President Barack Obama choosing a partisan path on financial regulatory reform. But Dodd pushed back against that notion, saying that several portions of his proposal enjoy bipartisan support and that he’s hopeful more than a few Republicans will back the measure when the final committee vote is held.

Additionally, Banking ranking member Richard Shelby (R-Ala.) was optimistic that the final bill would be bipartisan.

“If we reach an agreement in the committee, or on the floor later, we can bring a lot of votes — if we agree on things,” Shelby said. “That’s the goal, always.”

While Minority Mitch McConnell (R-Ky.) and his leadership team have steered the GOP Conference with a firm hand during the yearlong battle over health care, the minority has at times appeared rudderless in its approach to financial regulatory reform.

Throughout the health care reform debate last summer, three Republicans on the Senate Finance Committee — Mike Enzi (Wyo.), Chuck Grassley (Iowa) and Olympia Snowe (Maine) — led the GOP negotiating efforts with Chairman Max Baucus (D-Mont.). Those three Senators were not charged to make deals, but there was a clear chain of command back to the minority leadership.

Negotiations over financial regulations, however, have seen Shelby — whose relationship with Dodd is solid — drop in and out, replaced intermittently by first-term Sen. Bob Corker (R-Tenn.), a rank-and-file member of the committee.

National Republican Senatorial Committee Chairman John Cornyn (Texas), echoing many of his GOP colleagues, suggested the minority is reluctant to work with Democrats on regulatory reform given the course of the debate over health care. The onus for bipartisanship on financial reform rests with the president, he said.

“I see this as a serious problem for the administration. If they’re going to try to do it alone, it looks like a rerun of the same movie — same bad movie we’ve seen on health care,” Cornyn said. “It means it’s harder to get a product between now and November that they can run on, which they seem determined to do on health care even though the public doesn’t like it. So, I’d say there are risks on all sides.”

Nevertheless, Senate Republican leaders appear to appreciate the political imperative of establishing an approach to financial regulatory reform, particularly if they want to be in a position to influence the debate.

Republican sources say the minority is unlikely to offer a GOP substitute to the Dodd bill and would rather use amendments to affect the package.

And in fact, Corker said his staff is preparing a list of several amendments to file during next week’s markup. Other Republican Senators intend to do the same.

Beyond the committee, McConnell is focused on this issue, one Republican K Street operative said, and gearing up to deal with it after the fight over health care reform concludes.

Corker said the GOP doesn’t so much lack a strategy for approaching regulatory reform as it is allowing the process to work itself out.

“I think you’re seeing basically a hunker-down, where everybody’s really trying to understand the substance,” Corker said. “Those of us on the committee just want to get it right. When you talk about messaging … I think we want to get down to the substance, walk through amendments — see where we end up in committee. This is not like so many other issues.”

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