After financial regulatory reform won 60 votes in the Senate, but then lost the requisite super-majority as the bill went to conference, Democrats may now have secured the votes once again. At the urging of Republican Senator Scott Brown, they dropped a $19 billion tax on hedge funds and big banks, which was meant to pay for the bill's provisions. Now the legislation calls for extra stimulus funds to be used. How big a deal was this tax? And does this mean that financial regulatory has returned from doomed to viable?
- 'Spreading the Pain Around' The Washington Independent's Annie Lowrey writes, "Rather than charging the hedge funds and big banks considered most responsible for the financial crisis a reasonable fee for implementation, the conference committee will settle for ending a government stability program and spreading the pain around to all federally insured banks — including small community-focused banks — to satisfy the demands of one Republican. So it goes in Washington."
- Republicans Just Made the Deficit Worse The Atlantic's Daniel Indiviglio calls this "a very strange choice" for Republicans. Now, "taxpayers will pay for the regulation, since any TARP money unspent was supposed to go towards paying down the deficit. Those billions of dollars that would have been wiped out of the deficit will now have to come from the American people. Any money from higher bank assessments will ultimately cost consumers too, since banks will just pass on the expense to them through higher fees."
- Scott Brown's Weird Logic The Washington Post's Ezra Klein sighs, "So rather than a bank tax, which Scott Brown worried would take capital out of the banking system, we're going to drop part of the TARP program that was ... putting capital into the banking system. And rather than making big banks and big hedge funds foot the bill, FDIC fees will be hiked so that small banks have to pay in but hedge funds don't."
- Brown Still Holding Out, But Collins 'Inclined' to Vote Yes Talking Points Memo's Brian Beutler reports, "Scott Brown's playing cute, but his fellow moderate Republican Susan Collins says she's basically ready to vote for Wall Street reform. ... The final Senate vote on financial reform won't occur until after next week's August recess. Assuming Collins' vote is secure, Democrats will need anywhere between two and four Republicans to support."
- Obama Can Now Secure FinReg Votes The Atlantic's Marc Ambinder explains, "Sen. Scott Brown now has no excuse to oppose the bill, and the two senators from Maine (Collins and Snowe) should be back in the fold. That leaves the Democrats one vote short of 60 for cloture. Which means that President Obama might be giving Sen. Russ Feingold the Dennis Kucinich treatment shortly."