Too Big To Fail

Ignore the political posturing. Congress will pass the Wall Street reform bill.

Sen. Richard Shelby. Click image to expand.
Sen. Richard Shelby

At 5 p.m. Monday, Senate Republicans united to block debate on financial-regulatory reform. Afterward, Republicans and Democrats traded the usual charges and countercharges. The president weighed in with some tough rhetoric: “I am deeply disappointed that Senate Republicans voted in a block against allowing a public debate on Wall Street reform to begin. Some of these Senators may believe that this obstruction is a good political strategy, and others may see delay as an opportunity to take this debate behind closed doors, where financial industry lobbyists can water down reform or kill it altogether. But the American people can’t afford that.”

If it all sounded depressingly familiar, it’s because it was.

Don’t worry: Legislation is still likely to pass. Despite efforts to make this vote seem dramatic, the real drama (and work) is going on behind closed doors—and Republicans, in the end, don’t dare buck legislation that is so popular. (Despite the president’s alarmist rhetoric, he has a list of a few Republicans who will flip in the end).  Still, it’s no wonder that the American people have such a low opinion of Congress. Even when senators are doing their jobs, they make it look ugly.

Christopher Dodd and Richard Shelby are, by all accounts, working like adults to bridge their differences on the 1,300-page bill to regulate the financial industry. When the two top members of the Senate Banking Committee appeared Sunday on Meet the Press, it was a courteous and pretty substantive exchange. There was no shouting, and the hyperbole was kept to a minimum. Dodd mentioned several times how hard he and his counterpart had worked. I talked to Shelby today, and he, too, said that Dodd was “negotiating in good faith.” In addition to those two, Mark Warner and Bob Corker are working together on the legislation.

This behind-closed-door process is about as good as it’s ever going to get in the Senate on a contentious issue on which lobbyists have spent so much time and money on both sides of the aisle. (And on which Democrats need at least one Republican to block a filibuster.) The legislative negotiating feels as if it’s getting somewhere, and there will probably be a deal in the end. The process may not be pretty. But it shows a skeptical public that members of Congress can work through complicated issues in a reasonable fashion.

Then again, there are the scenes and sound bites that take place outside the negotiating room. Here the public can readily have its opinions confirmed. The debate is full of the hyperbole and countercharges that irritate and turn off people. Senate Minority Leader Mitch McConnell has called the legislation a partisan bailout bill, a charge Obama has called “cynical and deceptive.” The Democratic National Committee put a picture of McConnell on its Web site in front of a series of columns with the line: “The Party of Wall Street: All 41 Republican Senators Announce That They Stand With the Big Banks to Oppose Wall Street Reform.” Neither of these charges is true. But they spur predictable countercharges: As if on cue, the National Republican Senatorial Committee posted a “Democrat Hypocrisy Alert” pointing out all the money Wall Street employees have given to Democrats.

The likelihood of passage is inviting more misbehavior, not less. Both sides are trying to score points while they still can and shape the story line for after the legislation passes. Senate Majority Leader Harry Reid called today’s vote to proceed to debating the bill in order to put pressure on Republicans. It didn’t work (by the time the vote was called no one thought it would), but Democrats still think it works for them politically. Democrats want to turn this afternoon’s vote to proceed with debate into a referendum on which party is tougher on Wall Street. They hope the stain is so indelible it will remain even if Republicans join Democrats in supporting the final bill.

Democrats would seem to have the better of the political moment. According to a recent ABC News/Washington Post poll, 65 percent of the public supports reform. * The public also trusts Obama more than Republicans on the issue of financial reform. When Republicans opposed health care reform, they had public opinion on their side. Now they don’t. You’d think that given the numbers, they’d be making Chris Dodd tea, not voting against his legislation.

The reason Republicans could vote against the motion to proceed with debate is that they know they’ll vote for the bill in the end. (The measure has 50 percent support among conservatives,is backed by 69 percent of independents and 74 percent of moderates.) Meanwhile, Republicans think they won’t pay much of a political price for today’s procedural vote, because while Wall Street is unpopular, so is the federal government—and so are the congressional Democrats pushing the bill. Moreover, the ABC News/Washington Post poll shows half of those supporting reform saying it should be less strict, which gives Republicans confidence to call for tweaking. (So does the fact that Democrat Ben Nelson voted with Republicans on Monday. He said that with negotiations continuing, he couldn’t vote on debating a bill that didn’t yet exist.)

Democrats are trying to argue that Republicans are stopping the fireman on his way to the fire. But it may be more correct to say that that the public sees Republicans as merely checking to make sure his buckets aren’t full of gasoline. In this election year, Republicans are planning to campaign on the idea that they will serve as a brake on the excesses of the majority party. If a bill passes, Republicans will claim they turned a bailout bill into a sensible bill.

After the vote, negotiators will continue doing their work while their colleagues try to squeeze one last bit of politics out of the delay. Last week, a Pew poll found that people have their lowest opinion of Congress in 25 years. If legislation does finally pass, perhaps it will improve those numbers. Then again, given the way Congress is proceeding in public, perhaps ratings will drop further. Maybe Lloyd Blankfein, the CEO of Goldman Sachs who is scheduled to testify before the Senate tomorrow, can give members some advice about short selling their own stock.

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Correction, April 27, 2010: This article originally stated that the public supported reform legislation. The poll did not ask about the legislation specifically but about reform overall. Thanks to Kevin Clark. ( Return to the corrected sentence.)