WASHINGTON (Reuters) - Senators negotiating financial regulatory reform legislation said on Sunday they were close to a bipartisan agreement, as the White House said fraud charges against Wall Street titan Goldman Sachs highlighted the need for reform.
Democratic Senate Banking Committee Chairman Christopher Dodd and Senator Richard Shelby, the panel’s top Republican, told NBC’s “Meet the Press” they were talking through the weekend to try to reach agreement on a bill aimed at preventing future taxpayer bailouts of financial firms.
“We’re getting there, we’re close, we’ve got more work to do,” Dodd said. “I hope can get the votes tomorrow to start the debate.”
Senate Majority Leader Harry Reid has set a procedural vote to begin debate on a Democratic bill late on Monday. Republicans said they will likely vote to block consideration of the bill unless a bipartisan agreement is reached by then, but that would just delay -- not kill -- the legislation.
Democrats would need at least one Republican to break ranks with their leaders to get the 60 votes needed in the 100-member Senate to start debating the bill. Closed-door talks were likely to continue well through Monday.
“I think we’re closer than we’ve ever been,” Shelby said. “Will we get a bill by tomorrow, I doubt it.”
The broad legislative push by President Barack Obama and his fellow Democrats comes as fraud charges against Goldman Sachs Group Inc have thrown Wall Street and Republicans onto the defensive after months of working to weaken Democratic reform proposals.
Goldman is battling charges by the Securities and Exchange Commission that the firm hid vital information from investors about a subprime mortgage-linked security.
Newly released emails sent by Goldman Sachs executives on money the firm made by betting against risky mortgage securities are adding fuel to the debate.
“This underscores what is at the center of the president’s vision here: the importance of transparency, the importance of things being in the open, the importance of it being known who is in a position to benefit from what,” Larry Summers, director of the White House National Economic Council, told CBS’s “Face the Nation” news show.
One email dated November 2007 released by the Senate Permanent Subcommittee on Investigations showed Goldman Chief Executive Lloyd Blankfein writing: “Of course we didn’t dodge the mortgage mess. We lost money, then made more than we lost because of shorts.”
Members of both parties appear anxious to pass legislation ahead of the November mid-term congressional elections. The U.S. House of Representatives passed a package of financial reform proposals late last year, and the two chambers would work out their differences once the Senate passes its version of the legislation.
Senate Republican leader Mitch McConnell told “Fox News Sunday” he thought the Senate would eventually reach a bipartisan agreement. But, he said, “It’s my expectation that we will not go forward with this partisan bill tomorrow.”
The push for reform is seen continuing despite the outcome of Monday’s vote. Lawmakers agree they do not want a repeat of the crisis that brought the U.S. economy to the brink of collapse and forced taxpayers to bail out once high-flying financial firms.
“The president is totally committed, and it’s one of his key principles that, we’re going to end too-big-to-fail,” Austan Goolsbee, chief economist for the president’s economic recovery advisory board, told ABC’s “This Week” show. “We’re going to end the bailout era that began under the last president, for good.”
Despite partisan maneuverings, the top players in the negotiations expressed confidence that they eventually will get a bill that both Democrats and Republicans support.
“I‘m very confident. I think we’re going to have very strong support from Republicans for a strong bill,” Treasury Secretary Timothy Geithner said on CNN’s “GPS” show. “I think everybody has to be for reform,” he added.
When trouble developed because of excessive risk-taking, customers suddenly went from “banks falling all over themselves to lend them money at unrealistic rates, to credit drying up in a heartbeat,” Geithner said. “That system didn’t work so good for our country.”
Geithner acknowledged opposition from some Wall Street firms that fear some of their trading and other activities might be curbed, but said it will not stop the reform drive.
The financial reform bill, approved along party lines by Dodd’s committee, would bring new oversight to hedge funds and derivatives while cracking down on risky bank trading and putting in place protections for consumers.
It would also establish a system for unwinding troubled financial companies to prevent a repeat of catastrophes such as the collapse of Lehman Brothers in 2008.
The Lehman Brothers collapse came at the start of the deepest recession since the Great Depression, triggered by the implosion of the U.S. sub-prime mortgage derivatives market.
Additional reporting by Caren Bohan, Glenn Somerville and Tim Gardner; Editing by Vicki Allen