WASHINGTON (Reuters) - The U.S. Senate Banking Committee on Monday, approved landmark financial regulatory reform legislation, pushing the fight over the issue to the full Senate in April.
The committee voted 13-10 along party lines to pass a 1,336-page bill, which will need more than a simple majority to move ahead on the Senate floor -- arithmetic that was key to Republicans’ acquiescence to a quick committee decision.
The bill would set up a council of regulators to oversee financial risk, create a process for liquidating distressed financial firms, crack down on derivatives markets, and take other steps meant to avert another financial crisis.
President Barack Obama welcomed the committee’s vote.
“We are now one step closer to passing real financial reform that will bring oversight and accountability to our financial system and help ensure that the American taxpayer never again pays the price for the irresponsibility of our largest banks and financial institutions,” he said.
Obama vowed in a statement to fight to strengthen the measure and urged senators to resist efforts to water it down.
All of the committee’s Republican members voted against the measure at a working session that lasted 30 minutes.
Just hours before voting, the committee dropped plans for a weeklong debate of 400 amendments that were to be offered by Republicans and Democrats to a bill unveiled last week by the panel’s chairman, Democratic Senator Christopher Dodd.
The shift came after Republicans decided not to offer their 300 amendments, opting instead to take their fight to the Senate floor, where they have a better chance at blocking reforms that they and banks and Wall Street oppose.
“Republicans will not offer hundreds of amendments that would only be defeated” at the committee level, said Richard Shelby, the top Republican on the committee.
The tactical adjustment followed a win on Sunday for Democrats and the White House on healthcare reform -- another top Obama goal -- in the House of Representatives.
The committee’s approval of the Dodd bill marks the biggest step yet taken by the Senate toward putting in place new rules for banks and capital markets, two years after the collapse of Bear Stearns ushered in the worst financial crisis since World War Two.
While Republicans have worked closely with bank lobbyists to block reforms threatening financial industry profits, some in the party concur that regulatory reform is needed up to a point. They disagree with Democrats on how far it should go.
Shelby said he remains hopeful that “broad consensus” can be reached on reform as the Dodd bill moves toward the floor.
The Senate is scheduled to begin a two-week recess on Friday. When it returns in April, Democratic leaders will decide how and when to bring financial reform to the floor. Between now and then, lawmakers could reshape the bill.
Republican Senator Judd Gregg said in a statement that he wants to continue working with Democrats, but he criticized the Dodd bill on several fronts.
Senator Bob Corker, a Republican who tried but failed to broker a bipartisan deal with Dodd, called the committee’s unexpectedly quick vote “dysfunctional.”
But he added that “there is still an opportunity to produce a sound piece of legislation that will merit broad bipartisan support from the full Senate and stand the test of time.”
The House of Representatives approved a bill in December that called for the most sweeping regulatory changes since the Great Depression of the 1930s. The House bill embraced most of a comprehensive package of financial reform proposals introduced by President Barack Obama in mid-2009.
Failure by the Senate to produce a bill by July would hand Obama and the Democrats a defeat heading into the November congressional elections, and leave a cloud of political uncertainty hanging over the financial services industry.
Dodd had the votes to ram a Democratic bill through the committee, but in the full Senate, he and Democratic leaders will need to pick up some Republican support to win passage.
Democrats control only 59 votes out of 100 in the chamber. They would need to muster 60 votes to overcome procedural roadblocks that Republicans are likely to throw up.
Over the weekend, documents obtained by Reuters showed that banking committee Republicans had 300 amendments to weaken or kill the bill, with no clear focus among them. Republicans have yet to offer a single bill as an alternative to Dodd‘s.
Additional reporting by Caren Bohan, Karey Wutkowski and David Lawder, Editing by Gary Crosse and Leslie Gevirtz