WASHINGTON — Senate Republicans united Monday to block debate on legislation that would make the most far-reaching changes in financial industry regulation since the Great Depression - slowing but probably not stopping a bill that has been propelled by angry voters who want to crack down on Wall Street.
The 57-41 vote marked the first Senate showdown over the issue. No Republicans voted for the motion to begin debate on the bill; 60 votes were needed to end GOP delaying tactics and move the issue to the Senate floor. Sen. Ben Nelson of Nebraska, a Democrat, joined in the opposition.
But the impasse may be short-lived because behind-the-scenes negotiations among Democrats and Republicans are aiming to craft a compromise that could win back Nelson and some GOP converts, perhaps by the end of the week.
Monday's vote was largely political theater. Democrats think the GOP will end up looking like obstructionist friends of Wall Street. Republicans welcomed the chance to present themselves as preventing hasty action and holding out for better protection of taxpayers against the excesses of high-flying financiers.
"A party that stands with Wall Street is a party that stands against families and fairness," said Senate Majority Leader Harry Reid, D-Nev., who switched his vote to 'no' at the last minute in a parliamentary maneuver to enable Democrats to bring the issue up again, perhaps as early as today, in an effort to keep pressure on Republicans.
Senate Republican leader Mitch McConnell of Kentucky, for his part, said the GOP was opposing the motion to begin debate because it thought the Democrats' plan did not do enough to ensure that the government would not again foot the bill for bailing out institutions deemed "too big to fail."
A vote to block the bill from coming to the floor is "a vote for bipartisanship, for working out an ironclad solution to the problem of too big to fail," McConnell said.
After the vote, President Barack Obama issued a statement saying that he was "deeply disappointed" that Republicans voted to block the bill.
"Some of these senators may believe that this obstruction is a good political strategy, and others may see delay as an opportunity to take this debate behind closed doors, where financial industry lobbyists can water down reform or kill it altogether," Obama said. "But the American people can't afford that."
Tapping the anger
The push for overhauling the financial regulatory system - like the health care battle before it - represents a landmark domestic policy initiative by the president and his Democratic allies in Congress. And it may be their last chance for a major victory before this fall's contentious midterm elections.
In taking on Wall Street, Democrats are emboldened by recent polls showing that two-thirds of Americans favor their legislation - a populist fire fanned by recent fraud charges against Goldman Sachs by the Securities and Exchange Commission. Those charges will come under klieg lights today when a Senate subcommittee hearing on the financial crisis will call Goldman executives to the witness stand.
Despite the prospect of a bipartisan agreement, Reid pushed for Monday's showdown vote to step up pressure on the GOP and make it easier to portray them in a politically unfavorable light. Jim Manley, Reid's spokesman, said he also took a lesson from the bruising health care debate that a GOP clamor for bipartisan agreement may end up being just a delaying tactic.
But with the first showdown behind them, Democrats are divided over just how hard a bargain to drive in negotiations with the GOP.
Senate Banking Chairman Christopher Dodd, D-Conn., and other Banking Committee Democrats who have been working for months to write a compromise say they are eager to actually enact a bill, not just score political points along the way.
"I don't think it serves us well to be screaming at each other about who cares about this issue the most," Dodd said during Monday's debate.
Dumping the fund
Dodd and administration officials have already said they would drop or revise a provision setting up a $50 billion fund, financed by bank fees, for the government to oversee the orderly dissolution of troubled financial firms. Republicans argue that the fund and other provisions of the bill leave the door open to future bailouts.
But other Democrats are less willing to make major concessions to the GOP and complain instead that the bill is already too watered down. Sen. Bernie Sanders, D-Vt., and other liberals wants to offer amendments that would impose stricter limits on how big banks could get.
Sen. Russell Feingold, D-Wis., said he would oppose a bipartisan deal that "puts the fix in for some negotiated final product."
"Congress' recent history on regulating the financial sector is not a proud one," he said.