The Senate has recently approved two amendments in effort to protect taxpayers from ever having to bailout Wall Street…again. Receiving an overwhelming 96-1 Senate vote, Democratic Senator Barbara Boxer’s amendment states plainly, taxpayer funds cannot be utilized to bailout firms. And the joint effort of Republican Senator, Richard Shelby and Democratic Senator, Christopher Dodd; a plan to establish a new government process for recognizing and stopping financial monster firms, near financial ruin, was approved by the Senate 93-5. The plan calls for the Federal Deposit Insurance Corporation to oversee a liquidation process for stressed firms—whose failure could potentially put the banking system at risk.
Meanwhile, back in December, The House of Representatives approved a reform bill which would now have to coincide with whatever the Senate passes, in order to produce a final legislation. This is what eats away most at precious time: having all parties get on board with the same goals and ideas of ultimate financial reform.
Over 80 amendments to the bill have already been filed as tensions flare on the Senate floor and, sometimes, day-long debates slow the process. The biggest point of contention between Senators Shelby and Dodd continues to be the proposal to introduce a financial consumer protection watchdog, within the Federal Reserve. Some argue the notion of a Federal watchdog for consumers is “too much” on the part of government; others feel not enough is being done.
Another bit of controversy comes from Senate Agriculture Committee Chairman, Blanche Lincoln, who proposed banks be required to “spin off” swap-trading desks, yet, this proposal seems to have lost its steam. Gigantic Wall Street firms which generate large profits from OTC derivatives trading, including Goldman Sachs, JP Morgan Chase, Citigroup and Bank of America are opposed to the Lincoln provision, for obvious reasons. As well, Obama’s administration has chosen not to support the provision and some members of the FDIC have criticized it.
While pressure may be mounting and tempers flying, the importance of the Senate’s work on financial reform is immeasurable. Fact is, it doesn’t matter how long the process may take, at least something is being done.