The Wall Street Reform bill conference has begun, and you can watch it on CSPAN3. Tim Fernholz has a great overview of the mechanics, and you can see the conferees here, as well as the schedule set for the House and Senate to complete work on the bill by July 4.
What's going to end up in the bill is where it gets really interesting. Yesterday kos wrote about the new-found popularity of Lincoln's derivatives reform among Democrats. And it puts them in a tougher position. As of Monday, the conventional wisdom said that her swap-desks provision would be traded in for Volcker Rule provisions.
Senator Blanche Lincoln’s swaps-desk provision, which has been criticized by bankers and regulators alike, probably will be sacrificed in favor of Volcker rule trading curbs in House- Senate talks that may begin this week. Higher capital levels for larger U.S. banks may remain in the final bill as a nod to Senator Susan Collins, the Maine Republican who voted with Democrats to ensure passage of the legislation.
"The battleground will end up being the derivatives rule," said Kevin Petrasic, a former bank regulator now with law firm Paul, Hastings, Janofsky & Walker LLP. "It will cause the Volcker rule to be locked in because folks will be willing to give on the derivatives rule if they think the Volcker rule will stay in place," Petrasic said in a telephone interview.
Lincoln's win apparently took a lot of Dems by surprise, however, and now they seem to be thinking that keeping a tough-on-Wall Street reform in the bill might be a popular political idea. Who knew. There's also the little problem for Lincoln of now having to face the electorate once again in November. Had she lost on Tuesday, that analysis from Monday might have held. That's changed, and now the administration--which crowed about Lincoln's victory--is going to have to decide if they'll back Lincoln enough to drop their opposition to the provision.
At this point, with the new-found conviction that tough Wall Street regulation might be a political winner, it's quite possible that conferees won't take an either/or approach to swap-desks and the stronger Volcker Rule language Merkley and Levin are lobbying for, and will include them both.
Update: The Sunlight Foundation is also streaming the conference, with tremendous value added. For each speaker, they show you how much that member has received in campaign donations from the financial sector.
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