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Scott Brown: No on FinReg

Before today, Scott Brown was expressing “concern” about the $19 billion bank tax inserted into the Dodd-Frank conference report to satisfy paygo rules. Today he actually said he couldn’t support the bill.

U.S. Senator Scott Brown, a Republican who previously backed the regulatory-overhaul bill, withdrew his support, citing a $19 billion fee on banks and hedge funds negotiators inserted into the measure last week […]

“This tax was not in the Senate version of the bill, which I supported,” Brown of Massachusetts wrote in a letter today to House Financial Services Committee Chairman Barney Frank and Senate Banking Committee Chairman Christopher Dodd, who led the negotiations. “If the final version of this bill contains these higher taxes, I will not support it.”

This is, of course, the final version of the bill. Conference reports cannot be amended. Or rather, they can, but it would be something of a painstaking process, with the House having to recommit the report to the conference for changes.

Keep this position in mind the next time Brown screams about deficit spending. He would rather support a bill that isn’t paid for than one that taxes his precious banks.

The Senate leadership has a couple weeks to figure out the path forward. They almost certainly can’t pass anything without a replacement for Robert Byrd, which isn’t likely to happen this week. So they can do a deliberate vote count and see what options they have.

If Susan Collins and Olympia Snowe were to stay on board, their move should be to flat-out take out everything Scott Brown achieved with his hedge fund loophole in the Volcker rule, welcome Maria Cantwell back to the fold, and screw Brown for his bad faith. Or they could dare Republicans to filibuster a Wall Street reform bill over and over, putting them squarely in opposition to public opinion. The more likely outcome is that they drop the bank tax and just add the implementation costs to the deficit. Path of least resistance, don’t-cha-know.

UPDATE: Here’s the letter from Brown to Dodd and Frank. This part slays me.

Imposing this new tax is the wrong option. Our economy is still struggling. It is wrong to impose higher taxes and ignore the impact it will have on our economy without considering other ways we might offset the costs of the measure. I am asking that the conference committee find a way to offset the cost of the bill by cutting unnecessary federal spending. There are hundreds of billions in unspent federal funds sitting around, some authorized years ago for long-dead initiatives. Congress needs to start to looking there first, and I stand ready to help.

Hey, there’s gotta be something else laying around. You guys figure it out! If you need me, I’ll be at the racquetball court.

Way to go, Treasury Department, relying on this guy.

UPDATE II: There’s a strong sense of confusion coming from the Democratic leadership on how to move forward. Barney Frank seems to be leaning toward re-opening the conference committee and “tweaking” the revenue offsets.

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David Dayen

David Dayen