WASHINGTON — With health care legislation all but completed, the Obama administration and key Democratic lawmakers pledged Wednesday that passage this year of a sweeping revamp of financial regulation is now the next legislative priority.
"This is now the number one issue that the American public is going to be focusing on," House Financial Services Committee Chairman Barney Frank, D-Mass., told reporters after a strategy session at the White House.
Frank's committee passed a sweeping rewrite of the rules in December but has been waiting for the Senate to act. The Senate Banking Committee, on a party-line vote without amendments, passed on Monday a 1,336-page bill drafted by Chairman Chris Dodd, D-Ct. Dodd, too, was at the White House session Wednesday.
Both the House and Senate regulatory bills would create new authority to break apart giant financial firms whose failure poses risk to the broader U.S. and global economy. A fund would be created, collected from fees on banks, to extinguish banks that posed such a risk.
The legislation also would create a Consumer Financial Protection Agency to police consumer credit products such as mortgages, credit cards, payday loans and the like. The U.S. Chamber of Commerce and banks hope that Republicans can water down this aspect of the bill, the main obstacle to bipartisan support.
Although Senate Republicans voted en masse against the bill in committee, key GOP senators such as New Hampshire's Judd Gregg and Tennessee's Bob Corker said Wednesday that they expect a regulatory overhaul to pass this year. Earlier, Corker had said that senators had been close to a bipartisan compromise bill; at one point recently, Corker described the two sides as "95 percent there."
White House Spokesman Robert Gibbs was optimistic Wednesday that a meaningful rewrite can get done this year without the rancor that accompanied the health care debate.
"Well, I think, quite frankly, I think you've seen comments today from Sen. Corker saying that he believes there will be Republicans that do support financial reform," said Gibbs., who added that the Democratic committee chairmen restated their commitment during the White House visit to enacting the law this year. "I think the president expects that we will finish financial reform in the next couple of months, certainly by the time we mark the second anniversary of the financial collapse in the early fall."
While many conservative Americans are upset about changes to the health care system, when it comes to finance, the boiling anger is targeted at the banks, not at efforts to regulate them.
"The public really wants something to be done. And they hate bankers," said Douglas Elliott, a senior fellow at the Brookings Institution, a center-left policy research group. "These two things make it much less likely that Republicans would filibuster on this."
Asked if President Barack Obama will meet with Republicans to sway their vote, Gibbs skirted a direct answer but suggested that such efforts have been under way.
"I think the president has been very hands-on regarding financial reform, and I think it is one of the president's top priorities now, understanding, as I've said many times, that we need strong rules going forward to prevent the type of collapse we saw in the fall of 2008," the White House spokesman said.
Pro-regulation advocacy groups warn, however, that too much compromise on consumer protection could lose needed Democratic votes.
On Wednesday, in a speech at the Chamber of Commerce, Deputy Treasury Secretary Neal S. Wolin blasted the Chamber's $3 million ad campaign against financial-regulation legislation, charging that its efforts were aimed at killing any new regulation. He urged the Chamber instead to work with the administration to improve the bill.
The Chamber then fired off a news release challenging Wolin's points and attacking the pending legislation, though it contended that the Chamber "is committed to a bipartisan effort to modernize and strengthen our broken regulatory system..."
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