Left likely to be let down by Dodd bill

Senate Banking Chairman Chris Dodd will unveil a revised financial reform bill Monday that seeks to find a middle ground between the skeptical Republicans he left at the negotiating table last week and the unhappy left wing of the Democratic caucus.

Neither side will be satisfied by what Dodd’s offering, and the left will be particularly dissatisfied.

Two Republican ideas expected to make Dodd’s final cut are creating a consumer-protection agency inside the Federal Reserve and giving a veto on the agency’s rule-making to an outside body – a far cry from President Barack Obama’s original vision for a muscular stand-alone agency, several sources said Sunday.

That is sure to anger some Democrats, who say Dodd should put forth the toughest bill possible and then effectively dare the GOP to vote against cracking down on Wall Street.

“The Republicans won’t want to face the voters in November without having lifted a finger to rein in Wall Street excesses that almost ruined the country,” said one Senate Democratic aide. House Republicans voted unanimously against the financial reform legislation there.

That line of thinking holds that the politics of the Wall Street issue are so strongly on the Democrats’ side that it’s a win-win situation. Either moderate Republicans – say, Olympia Snowe of Maine or George Voinovich of Ohio – cross the aisle and support the Democratic bill, or Democrats will accuse Republicans of being Wall Street lapdogs during the 2010 campaign.

Other members of the Democratic caucus disagree with the premise that a partisan fight will help them in November, believing instead they need to show voters they can use their majorities to govern and that an effective reform bill is possible with Republican support.

Either way, Dodd’s bill will show where he comes down on the question, committed to finding some bipartisan support for a package of reforms aimed at curtailing the practices that led to the global financial meltdown in 2008. Putting the consumer agency in the Fed, for instance, is a compromise Dodd worked out with Sens. Bob Corker (R-Tenn.), who had taken the lead in bipartisan talks in recent weeks, and Richard Shelby (R-Ala.), the top-ranking GOP member on the banking committee.

Dodd abruptly decided last week to finish the draft he will unveil Monday without his Republican negotiating partners, but the legislation is nonetheless expected to contain several key concessions Dodd made to the GOP.

“This is still reasonably middle-of-the ground stuff,” said one industry lobbyist of the description of the bill making the rounds Sunday. continue…