Sen. Bill Nelson
, a Democrat, voted against cloture, effectively ensuring that Senate Majority Leader Harry Reid
would not get the minimum of 40 Senators needed to move the bill into formal debate. The legislation would have provided
for several things:
- an additional oversight council that would have ferried out risks in the financial sector,
- the ability for federal government to enforce regulation and put risky firms out of business,
- the creation of a fund to assist in liquidating those firms, and
- the potential regulation of the derivatives market.
The bill looked as good as dead when Sen. Richard Shelby
, (R-Ala.), couldn't reach a resolution with Committee-head Sen. Christopher Dodd
, (D-Conn.) over the weekend. Shelby said the bill granted too much freedom to the Federal Reserve
and the FDIC
, and didn't prevent the oft-repeated threat of banks becoming "too big to fail." Nelson had worries about unintended consequences -- an issue voiced by many Republican skeptics. Other Republicans criticized the bill because it did not explicitly outlaw future bailouts, which most economists saw as actually being incentivized by the bill.
Reid played a game of chicken by trying to push the bill forward today without knowing whether his caucus was in line. Nancy Pelosi
played a similar game with health care legislation in the House, but fortunately, Reid could not repeat her success in the Senate. It is now uncertain as to whether Congress will tackel financial regulation at all during this session; both parties have said it remains a priority, but the Congressional schedule is packed before the time-consuming mid-term election season.