June 29, 2010 / 2:23 AM / 7 years ago

WRAPUP 3-Wall Street bill passage seen despite Byrd death

* Senator Byrd's death means Democrats need one more vote

* Another Democrat likely to fill Byrd's Senate seat

* Final passage could slip to mid-July (Adds cost estimate of bill)

By Andy Sullivan and Kevin Drawbaugh

WASHINGTON, June 28 (Reuters) - The death of U.S. Senator Robert Byrd on Monday deprived his fellow Democrats of a crucial vote as they seek to pass a sweeping overhaul of U.S. financial regulations and could delay the process, but the measure is still expected to become law eventually.

Widespread public support for the Wall Street crackdown means Democratic backers are likely to find the needed votes either from within their ranks or from Republicans wary of siding with the financial industry, analysts said.

Byrd's replacement is also likely to be a Democrat, though that person may not be in a position to cast a vote for several weeks. [ID:nN28274206]

"Passage of Dodd-Frank is not a question of if, but a question of when," wrote Concept Capital analysts Teddy Downey and Chris Krueger in a research note, referring to the name conferred to the bill last week after negotiators hammered out a final version from competing measures passed by the House of Representatives and Senate.

The overhaul is the most extensive rewrite of the rules regulating Wall Street since the 1930s. It boosts consumer protection and saddles the financial industry with greater oversight and tighter regulation.

Democrats had hoped to give the bill final approval in the House and the Senate this week before sending it to President Barack Obama to sign into law by July 4.

But that timetable has been thrown into doubt with the death of Byrd at 92, as the bill's backers are one vote short of the 60 they had been counting on to clear a Republican procedural hurdle in the Senate.

The House is expected to pass the measure on Tuesday or Wednesday, aides said. But a Senate aide indicated that action in the upper chamber could slip until the week of July 12, after Congress takes a week-long break following the July 4th Independence Day holiday.

"It is still possible that we could take it up this week," said Regan Lachapelle, a spokeswoman for Senate Majority Leader Harry Reid.


Byrd's death and a threat from Republican Senator Scott Brown to withdraw his support for the bill have forced Democrats back into vote-counting and arm-twisting.

U.S. Treasury Secretary Timothy Geithner and White House economic adviser Larry Summers will reach out to lawmakers this week to get the bill to Obama's desk, a White House official said.

Including the two independents who usually vote with them, Democrats now control 58 seats in the 100-seat Senate. In May, Democrats had to scramble to muster the bare minimum 60 votes needed to end debate and move toward final approval.

Brown won significant concessions in the bill and voted for the Senate's version last month. But he has threatened to withdraw his support due to a $19 billion industry tax that was inserted into the final version in an all-night negotiating session last week.

A Brown aide said lawmakers could find $19 billion worth of cuts elsewhere in the budget rather than raising taxes.

Senator Olympia Snowe, another moderate Republican who had previously supported the bill, also said she was concerned by the new tax.

"I'm still looking at the legislation ... I would have preferred the bank tax not to be included," she told Reuters on Monday.

The tax would help to offset the cost of breaking up troubled financial firms and enforcing consumer protections.

Democrats originally had envisioned taxing large financial firms to set up a $150 billion fund to cover the cost of seizing companies whose stability threatens the economy, but dropped that idea over sustained Republican objections.

Without the fund, that authority would cost the government $20.3 billion over 10 years, the nonpartisan Congressional Budget Office said in an estimate released late on Monday, while the new consumer-protection bureau would cost $4.6 billion. Taken as a whole, the bill would have no effect on the budget deficit over 10 years, CBO said.

Two Democratic senators, Russ Feingold and Maria Cantwell, who voted against the Senate bill last month on grounds it was not tough enough, are likely to face additional pressure to support the legislation now.

Feingold said he would not change his position.

"My test for the financial regulatory reform bill is whether it will prevent another crisis," he said in an e-mail. The final version "fails that test and for that reason I will not vote to advance it."

Cantwell is still studying the 2,000-page bill and has not yet decided whether to support it, a spokesman said.

Another possible target is Republican Senator Charles Grassley, who has backed the bill at various stages in its journey through Congress. He has not made up his mind, an aide said on Saturday.


Democrats could also opt to wait for West Virginia Governor Joe Manchin, a Democrat, to appoint Byrd's interim successor. Manchin is expected to appoint a Democrat who would hold the seat until an election is held in November 2012, but that process could take several weeks.

There was no formal word from the governor's office on who Manchin may pick or when the temporary appointment may be made. Manchin refused to discuss it on Monday, saying he was focused on the death of Byrd, an aide said.

"I think (Byrd's death) probably will hold up the vote, and complicates it somewhat, but I'm not sure it'll be that impactful on the final legislation," said Michael Nix, a principal at Greenwood Capital Associates.

Investors have largely accepted that the bill will become law, he said. The KBW Banks index .BKX closed down 0.37 percent, slightly lower than the markets as a whole.

Byrd's death brought to mind the policy fallout from the 2009 death of another Senate icon, Edward Kennedy.

Kennedy's death threw a wrench into Obama's efforts to overhaul healthcare -- especially after Brown replaced him in a special election.

Even then, Democrats eventually managed to pass the healthcare bill, which enjoyed considerably less public support than the Wall Street crackdown.

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