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The narrative that's been building that Lincoln's tough derivatives reform was all about trying to solidify Dem/anti-Wall Street support before her primary tomorrow, and that further, once the primary was over, she and Dem leadership were ready to gut the reforms.

Now comes confirmation, direct from the horses' mouths.

Two key Democratic senators offered a narrow path for compromise over the weekend after banks pleaded with regulators and clients to help overturn provisions of a financial regulation bill they say will rock markets.

Chris Dodd, Senate banking committee chairman, and Blanche Lincoln, chairman of the agriculture committee, told the Financial Times there was room to negotiate on a proposal that would force banks to spin off their swaps desks....

Moderate Democrats are trying to cut a deal in private that would change the provision on swaps desks, which the industry and regulators warn is unworkable....

Asked about those two provisions, Mr Dodd indicated there was still room for movement. “We’ve got work to do and there’s a lot of conversations going on . . . I’m confident we can allay a lot of concerns,” he said, though not all complaints were “legitimate”, he added.

Ms Lincoln, the proponent of the swap desk spin-off, defended the policy but said she was open to “better” ideas. She faces a tough primary election in her state of Arkansas on Tuesday and is determined to maintain a strong anti-Wall Street line.

She's determined to maintain the strong anti-Wall Street line as far as it takes her. If she either loses or wins her primary outright tomorrow, don't count on that "strong" opposition to Wall Street to continue. If she loses, she can drop the act and do one last favor for her Wall Street buddies. If she wins, she's going to need to keep them with her for the general election.

Originally posted to Daily Kos on Mon May 17, 2010 at 03:22 PM PDT.

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