Sen. Mary Landrieu says she will seek protection for community banks
The hand of Agricultural Committee Chairman Blanche Lincoln, D-Ark., rests on the cover of the bill following a markup of the Wall Street Transparency and Accountability Act before the Senate Agriculture Committee on Wednesday.A measure to toughen regulations on derivatives, a complex financial investment that played a major role in the collapse of financial markets two years ago, has passed a key Senate committee with a support from a Republican senator, signalling the possiblity of movement on a bigger financial overhaul package.
The 13-8 vote by the Agriculture Committee, which included a yes by Republican Sen. Charles Grassley of Iowa, indicates GOP opposition to the measure is no longer solid.
Sen. Charles Grassley, R-Iowa, leaves a markup of the Wall Street Transparency and Accountability Act before the Senate Agriculture Committee on Wednesday.The derivatives regulations are to be combined with a more comprehensive package of financial regulations put together by Senate Banking Committee Chairman Chris Dodd, D-Conn. The top Republican on the Senate Banking Committee, Sen. Richard Shelby of Alabama, said his discussions with Dodd have resolved 85 percent of the critical issues to be decided in the legislation.
Sen. Mary Landrieu, D-La., said she probably will support the regulatory overhaul package, though she continues to press for changes to protect community banks "that didn't participate" in the risky behavior that severely wounded the U.S. economy.
"I also want to make sure that some of our mortgage lenders who are not in the same situation as Countrywide and others that practice irresponsible lending aren't regulated out of business," Landrieu said. She said she's been talking to Dodd about her concerns, and believes they can be resolved.
Her office also announced Wednesday that her re-election campaign committee is returning a $5,000 contribution from the Goldman Sachs political action committee. Goldman Sachs contributions have became an issue after the company was accused by the SEC last week of massive fraud, selling an investment to customers who were unaware the company had another financial scheme betting their investment would fail.
Sen. David Vitter, R-La., has been one of the most outspoken critics of the financial overhaul legislation, saying that a $50 billion fund, financed with levies on big banks, would be used to ensure the continuance of institutions that were saved from economic collapse only with taxpayer bailouts.
"We need regulatory reform, but we need it zeroed in on the real problems, and we need strong bipartisan support," Vitter said. "Such an approach would include ending federal bailout authority and the 'Too Big to Fail' mentality, enhancing consumer protection without creating a micromanaging 'super-bureaucracy,' addressing the systemic risk posed by Fannie Mae and Freddie Mac and careless mortgage lending policies, and improving coordination and communication among regulators."
Dodd has said he might drop the $50 billion fund to win GOP support, though it apparently won't be enough to get Vitter's backing. A key procedural vote on the proposal, which is described as the biggest overhaul of financial regulations since the 1930s, could occur today.
Rep. Charlie Melancon, D-Napoleonville, criticized Vitter on the issue, saying that the bill before the Senate and an earlier version passed by the House ensures that financial institutions won't be allowed to continue the reckless behavior that cost so many Americans their jobs and investments. Vitter, Melancon said, seems to be doing the bidding of large banks, which have lobbied against many of the new proposed regulations.
Until the SEC brought a civil suit against Goldman Sachs, the question of whether the Senate could pass a financial regulatory bill was very much in doubt. All 41 Republican senators wrote a letter in which they vowed to fight the legislation unless significant changes were made.
Without 60 votes, Democrats can't overcome a threatened GOP filibuster.
Dodd has said he remains open to GOP ideas, though Republicans expressed concern he might bring the matter to vote before a bipartisan agreement can be reached.
"At this point, I say to my colleagues, bring me your ideas, let's work on this together, let's debate the bill, and pass strong Wall Street reform, and protect our country from the kinds of abuses that lost so many their jobs, their homes, and their life savings," Dodd said.
James Hudson, CEO of the New Orleans-based Omni Bank, said he fears the new regulations will impose expensive new restrictions on community banks that weren't guilty of the reckless investments. He said Congress ought to even the playing field between big and small banks.
"It's pretty obvious that large banks have rebounded faster than the community banks, and it's because they get access to capital faster and quicker," Hudson said.
Louisiana lawmakers have benefited from Goldman Sachs contributions.
In her successful 2008 re-election campaign, Landrieu received $20,000 from company employees and the company's political action committee, according to the Center for Responsive Politics. That was before the $5,000 donation last month that her campaign says it will return.
Vitter hasn't received any Goldman money in his current re-election bid, though he did get $9,000 in 2004, when he first ran for the Senate, according to CRP.
Melancon received $4,000 in the current election cycle.
Bruce Alpert can be reached at balpert@timespicayune.com or 202.383.7861.