Ben Nelson’s Motives Questioned in Financial Reform Vote
Sen. Ben Nelson may find himself embroiled in yet another controversy over special deals for his state, considering the Nebraska Democrat on Monday voted against bringing up a financial regulatory reform bill after a provision that could have benefited Nebraska billionaire Warren Buffett was dropped.
Nelson — who was the only Democrat to join in a GOP filibuster of the bill Monday evening — told reporters after the vote that he is concerned about the effects the bill may have on small businesses, such as auto dealers. He also complained that he has not yet seen the final text of the bill because Senate Banking, Housing and Urban Affairs Chairman Chris Dodd (D-Conn.) and ranking member Richard Shelby (R-Ala.) are still negotiating a compromise.
“I want to make sure this deals with Wall Street and not Main Street,” Nelson said.
But Dodd indicated Monday evening that Nelson’s vote may have had more to do with the fact that the chairman eliminated a provision supported by Nelson in the Agriculture, Nutrition and Forestry Committee and sought by Buffett on behalf of his company Berkshire Hathaway.
Asked about Nelson’s vote, Dodd said he couldn’t accommodate the Nebraskan’s push to exempt some companies from having to back up their derivative investments with additional collateral.
Saying he was prepared to make some adjustments for companies with existing derivatives contracts, Dodd noted, “I can’t very well turn around and say by the way, you don’t have to have margin requirements. There are trillions of dollars in play. That would raise risks again.”
He added that the Treasury Department is “working to get some language to see if something can be done without exposing the economy to the kind of problems you’d have with derivatives out there without margin requirements.”
Dodd, who was seen conversing with Nelson and Senate Majority Leader Harry Reid (D-Nev.) before the vote, said the conversation revolved around the derivatives exemption.
“Dentists and auto dealers didn’t come up,” he said when asked.
Dodd removed Nelson’s provision from his bill this weekend during negotiations with Agriculture Chairman Blanche Lincoln (D-Ark.) on her derivatives title.
Nelson spokesman Jake Thompson denied that Nelson voted with Republicans because Dodd cut the exemption for companies like Buffett’s. Thompson said the provision that made it into Lincoln’s bill was not written by Nelson and was not the reason for his support in committee. Nelson had previously refused to commit to voting against the threatened GOP filibuster.
Nelson was roundly criticized during the recent health care debate for securing the ” Cornhusker Kickback,” a provision that would have guaranteed the federal government would pick up the tab for the state’s new Medicaid expenses.
Derivatives are complex financial instruments in which investors bet on the future price of commodities or other financial products. Mortgage-backed derivatives have been blamed, in part, for leading to the near-collapse of the financial industry in 2008.