WASHINGTON – Senate Republicans say they are ready to end their stalling tactics and begin debate on legislation designed to overhaul the nation’s financial regulations and prevent a repeat of the 2008 economic meltdown.
The movement came after Democrats pledged to meet through the night – an attempt to shame Republicans into debating the issue – and after Republicans said they had reached an impasse in private negotiations.
“It is now my belief that further negotiations will not produce additional results,” Senator Richard Shelby, chief negotiator for the Republicans, said in a statement.
Both sides are now girding for battle and ready for a significant fight on the Senate floor. Democrats were preparing to claim victory, and Senate Majority Leader Harry Reid was planning to deliver a statement on the Senate floor.
“It is time for this debate to begin,” said Senator Christopher J. Dodd, the Connecticut Democrat and chairman of the Senate Banking Committee. “And it must be a serious, vigorous debate.”
It is initially unclear whether Senator Scott Brown will support moving debate to the Senate floor. He had previously said he would join a Republican filibuster unless certain conditions were met, but pro-financial reform groups have been targeting him with TV ads, press releases, and photo ops.
Shelby and Dodd had been locked in negotiations for several days. Shelby this afternoon criticized several major components of the bill, but also indicated that there had been a deal over a top Republican concern – that there would be no bailouts for big banks. Without offering specifics, Shelby said that Dodd made “significant and meaningful” concessions on that issue.
“Now that those bipartisan negotiations have ended, it is my hope that the majority’s avowed interest in improving this legislation on the Senate floor is genuine and the partisan gamesmanship is over,” Senate Minority Leader Mitch McConnell said in a statement.
For the third time in three days, Republicans earlier in the day voted against bringing the measure up for debate. Without the 60 votes needed to avoid a filibuster, the legislation cannot come to the Senate floor for amendments and debate.
Democrats then began planning to meet through the night, in an effort to break the logjam on bringing financial reform to the Senate floor.
“We’re going to stay here,” Senator Ben Cardin, a Democrat from Maryland, told reporters this afternoon shortly before Republicans agreed to move toward a floor debate. “And if the Republicans are going to filibuster it, the American people are going to see that they’re filibustering this issue.”
Polls suggest the legislation is popular with the public, but it has drawn strong opposition from securities industry lobbyists.
The legislation is designed to crack down on practices that led to the economic collapse in 2008, when the federal government had to intervene with a $700 billion program designed to prop up failing financial institutions deemed "too big to fail.”
It would establish a system for shutting down failing firms without disrupting the entire financial system.
It would also establish a council that would be charged with monitoring the system for potential problems, and would establish a consumer protection agency to help prevent people from getting into trouble with mortgages and credit cards they can't afford.
The bill also aims to crack down on derivatives, which played a key role in the economic collapse. Financial firms, for example, bet on the direction of thousands of bundled home mortgages that later failed because the mortgages were issued without adequate credit.
Under the current legislation, the trading of such derivative products would have to be done on an open market, and some firms would be unable to continue their operations.
One of the main targets of Republican opposition has been the $50 billion fund to wind down failing institutions. Republican opponents have said that it could still allow for bailouts of large firms.
Republicans also oppose the so-called Volcker rule, named for former Federal Reserve chairman Paul Volcker. The rule would put new investment restrictions on large institutions, including preventing them from owning private equity funds.
Massachusetts life insurance companies oppose the provision because it would force them to stop investing in the Massachusetts Capital Resource Company, a consortium formed in 1977 that has invested about $575 million in 300 businesses.
Matt Viser can be reached at firstname.lastname@example.org.
About Political Intelligence
Glen Johnson is Politics Editor at boston.com and lead blogger for "Political Intelligence." He moved to Massachusetts in the fourth grade, and has covered local, state, and national politics for over 25 years. E-mail him at email@example.com. Follow him on Twitter @globeglen.