Sweeping legislation to rein in Wall Street suffered a temporary setback in the US Senate on Monday, as US President Barack Obama’s Republican foes defeated a push to formally take up the bill.
Lawmakers voted 57-41 to open debate, falling short of the 60 needed to move ahead with the most ambitious regulatory overhaul of its kind since the Great Depression of the 1930s, and drawing a swift rebuke from the president.
“I am deeply disappointed that Senate Republicans voted in a block against allowing a public debate on Wall Street reform to begin,” Obama, who has made the overhaul his top domestic priority, said in a statement.
Spurred on by US public anger at big banks blamed for the 2008 global economic meltdown and facing November mid-term elections, both Democrats and Republicans say they want tough new rules on Wall Street.
However, Republicans opposed the bill as drafted and said they would not agree to open debate until year-old, closed-door talks on drafting a compromise bill have run their course.
Democratic Senator Ben Nelson joined 39 Republicans in voting against the motion, while two Republicans did not vote.
Democratic Senate Majority Leader Harry Reid voted no for procedural reasons — it enabled him to bring up the bill again at a moment’s notice, perhaps as early as yesterday — and said he expected “more votes this week” on the issue.
“We remain open to working with our Republican colleagues, but we will not tolerate efforts to slow-walk this process or water down this reform because it is too important to middle-class families,” Reid said in a statement.
The vote came as a key Senate committee geared up to grill top Goldman Sachs executives yesterday about the embattled Wall Street investment giant’s controversial actions in the run-up to the worldwide meltdown.
Amid anger at Goldman and other big banks, a new Washington Post/ABC poll found the US public backs tougher rules for Wall Street by a 65-31 percent margin.
The bill aims to usher in sweeping new regulations on Wall Street a decade after Democrats and Republicans together stripped the system of rules enacted after the Great Depression.
The measure, championed by US Senate Banking Committee Chairman Chris Dodd, a Democrat, would notably try to address the problem of financial institutions whose collapse could risk crippling the US economy.
The bill maps a way to dissolve such “too big to fail” firms in a bid to avoid massive taxpayer-funded “bailouts” approved in late 2008.
The legislation — widely seen as less muscular than an approach that cleared the House of Representatives last year — would also establish a new agency to protect consumers from shady lending practices.
The final legislation will also tighten regulations on the giant market in derivatives — complex, privately traded instruments tied to the underlying value of a commodity and seen as vehicles for dangerous speculation.
Senate passage would be a key step, but that bill and the House version would have to be merged into one, which would then need to be approved again to be sent to Obama.
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