It looks like Democrats will move to financial reform next after passing health care. Barney Frank and Chris Dodd met with the President today about it. And two Republicans acknowledged that the bill passed out of the Senate Banking Committee in 20 minutes would pass on the floor.

The legislation appeared to be gaining momentum, as two crucial Republicans on the Senate Banking Committee, Judd Gregg of New Hampshire and Bob Corker of Tennessee, said they expected the overhaul to pass this year even though they had concerns about some of its provisions.

A Democratic strategy appeared to be emerging: expressing confidence that the measure would pass and urging Republicans to help shape legislation that they could support, rather than trying to block it.

“When we come back from recess, the No. 1 issue for the U.S. Congress will be this bill in the United States Senate,” Representative Barney Frank of Massachusetts, the Democratic chairman of the House Financial Services Committee, said after meeting at the White House with President Obama.

The Banking Committee’s ranking Republican, Richard Shelby, has returned to work with Dodd on reaching a bipartisan agreement, though Bob Corker lamented not sitting in committee for three months while he slow-walked to an agreement.

Obviously the major question is whether the bill that emerges from the Senate will be worth a darn. The lack of leverage requirements and other checks to stop companies from getting too big before they become too big to fail worry many observers. And the housing of the consumer protection bureau inside the Fed, where it was before when that agency missed the housing bubble and failed to protect borrowers, worried others.

Mind you, there’s still an all-out assault on the bill from bank lobbyists and the Chamber of Commerce, though I was surprised by the broadside by the Treasury Department’s Neal Wolin against their efforts today.

Instead of chasing bipartisanship and weakening the bill in the process, financial reform is one case where it’s probably more apt to just force Republicans into a corner. Wall Street is hated (and that poll actually does not show opinion against the CFPA) and it makes much more sense to put Republicans on the wrong side of that opinion. Especially if the bill on offer will not meaningfully deal with the problems in the financial sector, which frankly have much more to do with changing bankster behavior through carrying out prosecutions for fraud, or empowering regulators to actually do their job and enforce the laws already on the books.

David Dayen

David Dayen

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