Merkley and Wall Street Reform: Down to the Wire

Dan Petegorsky

Update: Well, that was quick. The bill has now passed the Senate on a 59-39 vote after Brownback withdrew his amendment - thereby also taking out the Merkley-Levin amendment. Joan McCarter at Kos has more.

This afternoon Senate Majority Leader Harry Reid mustered 60 votes to close off debate and bring the major financial reform bill up for a final vote. Before that happens, though, two vital issues still need to be resolved, and Oregon Senator Jeff Merkley is at the center of the debate.

On the one hand, Senator Sam Brownback (R-KS) has an amendment pending that will open up an enormous loophole in the soon-to-be-created Consumer Financial Protection Bureau by exempting auto dealers from coming under its oversight. This is a terrible idea. I suspect most readers are aware that auto dealers are major lenders, and are consistently the top source of consumer complaints to the Better Business Bureau.

On a much more positive note, Sen. Merkley and Sen. Carl Levin (D-MI) have attached to Brownback’s amendment an incredibly important amendment that would ban proprietary trading by banks receiving federal funds. In plain English, this would prevent banks from using taxpayer-backed money to gamble for their own profit. It also prevents mega-“banks” like Goldman Sachs from betting against securities they put together and sell to their clients.

Right now, this presents us with something of a “Sophie’s Choice,” since the amendments are joined at the hip. If we want Merkley-Levin to pass, Brownback’s gift to the auto dealers also has to pass, while the only way to kill that exemption at the moment is to kill Merkley-Levin along with it. But there’s some hope that the two can be split and considered separately. Either way, the critical message is the same: defeat Brownback and maintain strong consumer protections, and support Merkley-Levin to tighten regulations on high risk, speculative trading where the big investment firms reap the profits while we all bear the losses.

This bill won’t fix all that needs to be fixed – but it’s an important start, and, remarkably, the bill has improved in the Senate as advocates have fought armies of industry lobbyists and organizers have mobilized across the country to demonstrate their outrage at Bank of America, Wells Fargo, and Goldman Sachs. By keeping up the pressure we can both improve the current bill and set the stage for the fights to come.

By Dan Petegorsky May 20, 2010