* Big fight looms; debate focuses on "too big to fail"
* Some Republican support needed to pass Senate bill
* Bill would toughen oversight of banks, capital markets
(Recasts with Gibbs, Whitehouse comments)
By Caren Bohan and Kevin Drawbaugh
WASHINGTON, April 14 U.S. President Barack
Obama and top Republicans faced off on Wednesday over a
Democratic plan in the Senate to crack down on Wall Street.
After talks in the White House, Republicans ripped into a
Democratic reform bill, saying it would protect big banks, hurt
small banks and guarantee "endless taxpayer bailouts of Wall
Democrats blasted back that the Republican attack was
"completely unhinged from reality" and defended the bill as an
attempt to put a stop to excesses and bailouts like the ones
improvised in 2008 under Republican President George W. Bush.
Both sides said a bipartisan package could still be worked
out, but amid the rhetoric, there was little sign that either
gave ground on the reform plan at the White House talks.
"If there is one lesson that we've learned, it's that an
unfettered market where people are taking huge risks and
expecting taxpayers to bail out when things go sour is simply
not acceptable," Obama said.
Democrats want tighter oversight of derivatives markets and
protections for consumers from abusive mortgages, among other
restraints, but they need the support of Republican lawmakers
to push a bill through the full Senate.
Republicans have worked closely for months with bank and
Wall Street lobbyists to weaken and block Democrats' proposals
in a fight that was overshadowed by healthcare reform.
Now that he has won a major victory on that front, Obama is
making financial reform his top legislative priority. The issue
is shaping up as a battleground for the November congressional
elections, when Democrats hope to tap into widespread popular
anger at Wall Street.
Factbox on the Democratic Senate bill [ID:nLDE63D217]
Factbox on the main players [ID:nN14167297]
Factbox on reforms missing [ID:nN14183767]
Reuters Insider video link.reuters.com/jeh77j
Reuters Insider video link.reuters.com/nuk77j
The White House declined to give a specific timeline for
passing reform, but said it was "untenable" that Congress could
end its session this year without taking action.
White House spokesman Robert Gibbs told reporters in a news
briefing: "I quite frankly think that there will be a decent
number of Republicans (who) will be on the side of reform."
A vote on financial reform is expected soon in the Senate.
Senate Republican Leader Mitch McConnell slammed the bill.
"It will lead to endless taxpayer bailouts of Wall Street,"
he said after talks with Obama, House Republican leader John
Boehner, Senate Democratic Leader Harry Reid, House of
Representatives Speaker Nancy Pelosi and House Democratic
leader Steny Hoyer.
Boehner told reporters: "My concern is that it protects the
biggest banks in America and harms the smallest banks."
Obama administration officials have argued that passing a
reform bill is crucial to preventing a repeat of the 2008-2009
financial crisis that tipped the U.S. economy into its worst
recession in decades, unleashing a global push for reforms.
The Republicans' criticisms about bailouts are "completely
unhinged from reality," said Democratic Senator Sheldon
Whitehouse at a briefing with reporters.
"The American people want to end bank bailouts and that's
precisely what the ... bill aims to do," he said. "It's the
height of hypocrisy for the Republicans to refer to a bill
designed to end bailouts as a 'bailout bill.'"
Policymakers around the world are revising financial
regulations affecting banks, insurers, hedge funds, exchanges,
derivatives markets and asset management companies. Much of the
international focus is on imposing a new tax on banks.
IMF BANK TAX REPORT SOON
The International Monetary Fund is expected to make
recommendations to G20 finance ministers in 10 days on forcing
banks to contribute toward future bailouts. Obama has already
proposed a bank levy, as have Britain, France and Germany.
JPMorgan CEO Jamie Dimon on Wednesday hit back at
Washington as his firm reported profits that beat forecasts,
underscoring a Wall Street comeback. Dimon groused about an
Obama proposal to recoup taxpayer bailout costs through a $90
billion "financial crisis responsibility fee."
"Let's all not call it a bank fee, and call it what it is,
which is a punitive bank tax," Dimon told a conference call.
Republicans have seized on a part of the Senate bill that
would empower regulators to dismantle in an orderly way big
financial firms that get into trouble. The idea is to prevent
costly bailouts like the Bush administration's rescue of AIG,
while averting disastrous bankruptcies like Lehman Brothers'.
The "orderly liquidation" plan, Republicans say, would
allow more bailouts by preserving the potential for the U.S.
Treasury, the Federal Reserve and the Federal Deposit Insurance
Corp. to step in to stabilize the financial system.
After meeting with Obama, Reid told reporters: "It's
obvious that the Republicans are saying 'no' again to progress
for America. We're going to move forward just as rapidly as we
can with the bill."
In the November elections, all 435 House seats and more
than a third of the 100 Senate seats are up for grabs.
The House in December approved a sweeping financial reform
bill, with no Republicans voting in support. It embraced many
of changes first proposed by Obama in mid-2009.
(Additional reporting by David Morgan, Thomas Ferraro, Karey
Wutkowski, Ross Colvin, Steve Holland and Patricia Zengerle;
Editing by Cynthia Osterman)