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McConnell Signals Return To Bargaining Table On Wall Street Reform

The word “filibuster” didn’t appear in Mitch McConnell’s remarks about Wall Street reform today, as his caucus and the Democrats continue to negotiate over the bill (backroom deal!!!!).

After a week of attacking the pending legislation as a ticket to new taxpayer “bailouts,” McConnell is striking a different tone. Monday on the Senate floor, he called for lawmakers to move beyond “personal attacks and questioning each others’ motives” to “fixing the problems in this bill.”

And McConnell conceded, after being chastised by no less than President Obama in his weekly radio address, that “both parties agree on this point: no bailouts. In my view, that’s a pretty good start.”

On Tuesday, McConnell returned to the chamber and announced he was “heartened to hear that bipartisan talks have resumed in earnest.” Senate Democratic leaders are preparing to bring the overhaul bill to the floor as early as Thursday, but all 41 Republicans have signed a letter stating their opposition to the bill in its current form. Unless Democrats can peel off at least one GOP senator to allow debate to proceed, a GOP-led filibuster could block financial regulatory reform indefinitely.

Basically, Richard Shelby, Bob Corker and Judd Gregg are involved in high-level talks with the Banking Committee, which presumably would go into a chairman’s mark. In addition to eliminating the pre-funded liquidation funds through a fee on banks, Republican talks would presumably weaken derivatives reform. The White House says now that they wouldn’t make the changes unless they net Republican votes. President Obama is calling key Republicans about the bill.

This does look eerily familiar, as Paul Krugman said today.

I have a theory about the problem here. My understanding is that Obama officials have looked at the polls, which show that the public overwhelmingly favors cracking down on Wall Street; so they assumed that the GOP wouldn’t dare stand in the way. But they seem not to have learned, even now, that the right has an awesome ability to create its own reality: that Mitch McConnell et al would stand in the way of reform while claiming to be taking a stand against Wall Street.

Nor can you count on the truth to sink in with the public. The conventions of he-said-she-said reporting, among other things, make it surprisingly easy to get away with even the most obvious hypocrisy.

And therefore a “bailout fund” that is in no way a bailout fund gets excised, and Republicans will still say the bill has a bailout fund.

I prefer to judge the outcome by the content of the bill. The Dodd bill is actually unnecessarily weak to deal with the problem, and talks with Republicans aren’t likely to improve that. Maria Cantwell is talking about a Glass-Steagall type amendment putting a wall between investment and commercial banks, going even further than the “Volcker rule” which is (sort of) in the bill. And there’s the Brown Amendment on bank size, as well as the rules on leverage. That would be the place to look to see if this is worth passing.

UPDATE: RIchard Shelby confirms the new negotiations, says “we’re getting down to words and phrases.”

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David Dayen

David Dayen