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Road Map: Financial Reform Still in Flux

Senators Send Mixed Signals

Neither Senate Democrats nor Republicans seem all that confident that they have identified a winning strategy when it comes to the upcoming financial regulatory reform debate.

[IMGCAP(1)]Though Democratic leaders claim they are willing to bring the bill to the floor as soon as Thursday with or without GOP support, they are also relying on a full-court press by the White House and Treasury Secretary Timothy Geithner to recruit the crucial Republican votes that they need to overcome a threatened GOP filibuster.

Republican leaders contend their 41 Members are united against the package and prepared to make good on that threat if Democrats don’t change it to their liking. On Monday, Banking, Housing and Urban Affairs ranking member Richard Shelby (R-Ala.) said: “I think Republicans will hang together right now, and I’m not sure Sen. Reid would want to push a vote.”

But privately GOP aides acknowledge that the vote count is far from certain. And Republican Conference Chairman Lamar Alexander (Tenn.) hinted the Republicans did not necessarily have the commitment of all GOP Senators to block the bill from coming up.

“We have 41 Senators who want to play a part in a bill that should be a bipartisan bill,” Alexander said, adding that the bill would need to be bipartisan “either before it goes on the floor or before it goes off the floor.” The No. 3 GOP leader said he is meeting with Geithner today.

Senate Minority Leader Mitch McConnell (R-Ky.) appeared to soften his rhetoric on the bill Monday, noting on the floor that it could be massaged to win GOP support. McConnell had earlier been using strong language to suggest Democrats need to take a step back and return to the negotiating table, rather than push a partisan, “bailout” bill.

“These problems are not insurmountable. This bill is not unfixable,” McConnell said.

The 59-member Democratic Conference needs 60 votes to beat back a filibuster — or invoke cloture — on a motion to proceed to the bill. Senate Majority Leader Harry Reid (D-Nev.) could file a cloture motion on the bill as soon as Thursday, aides said. That would likely set up a vote for Monday.

[IMGCAP(2)]GOP sources said McConnell is in a pickle because his centrists don’t trust his motivation to stall the legislation on which they desperately want to wheel and deal, and they fear he may be trying to drag out negotiations in an attempt to kill it altogether. However, those same centrists are just as suspicious of a Democratic leadership that they feel has courted them in the past, only to abandon them in favor of partisanship.

“This may very well be an exercise in trust,” one Senate GOP aide said.

Another Senate GOP aide explained: “Nobody wants to be against this. They want to be for it, but we don’t want to get jammed.”

Two key GOP moderates — Sens. Susan Collins and Olympia Snowe, both of Maine — met with Geithner in back-to-back meetings Monday but came out singing slightly different tunes.

Collins reiterated she would support a filibuster this week because she believes more time is needed to negotiate a bipartisan bill. Collins said she believes such a deal could be reached in three to four weeks.

“I am very optimistic that given more time … we can put together a bipartisan bill that would take care of the too-big-to-fail phenomenon,” Collins said.

The meeting revealed “a lot of common ground” on regulatory reform, she said. Collins, whom Democrats are viewing as a key potential vote, told reporters that Geithner agreed the bank-funded $50 billion account to shut down failing financial firms should be dropped from the measure. Collins also said she discussed how best to regulate Fannie Mae and Freddie Mac, and whether to create a new consumer protection agency or to improve existing offices.

“My hope is the White House will now decide that it’s in everyone’s interest to take the time to come up with a good bill,” she said.

Like Collins, Snowe also said the bill doesn’t address how to rein in reckless institutions and suggested she would be open to compromise in the coming weeks as long as the controversial $50 billion fund is dropped. Snowe also sought to slow the Democrats’ pace to pass the sweeping overhaul, but she held out hope that an agreement could be reached by week’s end and stopped short of saying she would vote to filibuster it.

“I’m always willing to be the only Republican if that’s the right thing. Hopefully, we do the right thing,” Snowe said.

But Democratic aides said leaders are prepared to bring the bill up without making any changes. They do not want to jettison the $50 billion fund, one Senate Democratic aide said, because they do not want to be seen as validating GOP claims that the fund amounts to a permanent taxpayer bailout.

“We’re pretty fearless in terms of pursuing the bill as is,” said the Democratic aide, who noted further changes could occur during floor debate.

Banking Chairman Chris Dodd (D-Conn.) also questioned whether Republicans would be brave enough to block the bill before it has even been debated on the floor, and he pointed out that a Friday letter signed by all 41 Republicans does not promise a filibuster.

“I don’t really believe Republican Members want to be in a position where they’re talking about filibustering,” Dodd told reporters Monday. “So I’m going to work on the assumption that the glass is half full here and that when we bring this bill up later this week, that we will have the votes across the board, whatever differences may exist in the legislation, to allow us to debate this legislation, consider amendments and move forward.”

But Dodd also did not rule out making further changes to the bill or even eliminating the $50 billion fund.

“We need to find out what it is that people are talking about, other than just, sort of, the accusation of this occurring here,” Dodd said of the fund. “And if there are ideas in which we can do this, to bring people together, that insulate that taxpayer, fine. I’m happy to do that and do it. This is not a question where I’m rigidly holding on to this at the expense of every other idea.”

Democrats also tried to ratchet up the pressure on Republicans by framing the issue as a question of “Whose side are you on?” They also looked to tar Republican opponents as protecting the big banks who led the country to near financial ruin from effective regulation.”It’s the same story and the same script over and over again,” Majority Whip Dick Durbin (D-Ill.) said Monday afternoon, adding that Republicans simply want to “stop and kill” the legislation.

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