The House is going to vote on the revised conference report on financial reform today. Yesterday, the conference reconvened in order to find a new way of paying for the bill, because Republican Senators, particularly Scott Brown, thought taxes on big banks was unfair to the big banks. Ezra links to a good summary of the changes.
Conference reconvened due to the protests from centrists Republicans in the Senate who didn't like the idea of taxing the big banks and hedge funds. Instead, taxpayers will pay for the regulation, since any TARP money unspent was supposed to go towards paying down the deficit. Those billions of dollars that would have been wiped out of the deficit will now have to come from the American people. Any money from higher bank assessments will ultimately cost consumers too, since banks will just pass on the expense to them through higher fees.
These Republicans have made a very strange choice. They decided to lighten the load on big banks, some of which will now just have to pay slightly higher assessments. Meanwhile, investment banks -- like Goldman Sachs -- will virtually escape the expense entirely, since they have few deposits. Hedge funds avoid the cost completely. Even though a tax on big banks might have been an economically questionable decision, it's hard to see how pushing the tax to average Americans and smaller banks helps matters.
If these Republicans were really concerned about a tax, then they should have demanded spending cuts to fill the gap or scaled back some of the expensive regulation that the bill calls for. The only ones who benefit from this change are big banks and hedge funds. Taxpayers and community banks are indisputably worse off.
That's a strange--and bad--choice by Republicans if viewed through a policy lens, but from a political standpoint it makes perfect sense. They want the big banks on their side going in to November, and undoubtedly expect to be richly rewarded for representing their interests.
But here's the good part (good in the exasperatingly predictable sense). Scott Brown is still holding out his vote.
This morning, Brown continued to hold out, saying he would not make a decision on the bill for at least another week, after the Senate returns from a weeklong recess. That may be too late: the House is planning to take up the issue this afternoon, and Senate Democrats are still hoping they could squeeze it in this week.
"I appreciate the conference committee revisiting the Wall Street reform bill and removing the $19 billion bank tax," Brown said in a statement. "Over the July recess, I will continue to review this important bill. I remain committed to putting in place safeguards to prevent another financial meltdown, ensure that consumers are protected, and that this bill is paid for without new taxes."
Scott Brown must have been spending a lot of time at Olympia Snowe's knee, learning all about how to hold that damned football.
Update: Susan Collins is now leaning toward a "yes" vote. Reid has announced that the the vote will be after the July 4th recess.
Ezra has a post on Feingold, who is still opposing the bill, that echoes my thoughts. Feingold was pressured by progressive groups to hold out his vote for a stronger bill. That didn't work, since it appears that negotiating with Brown and Collins was the way the White House and Dodd chose to go--that's two votes rather than one. From a principled standpoint, yeah, the bill isn't as strong as Feingold, or most reformers wanted. From a practical standpoint, his continued holding out isn't going to make the bill better at this point, and won't make it more likely that Congress comes back with a stronger bill if this one fails. There are improvements on the status quo in the bill, even if it doesn't end too big to fail. Feingold should vote for cloture, and vote against final passage.
