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From Naked Capitalism: Today provided yet another example of how the best government money can buy works. The Senate majority leader Harry Reid suffered an embarrassing defeat when his effort to pass a motion for cloture, which would have stopped debate on the financial reform bill, failed due to two Democrat and one Republican defection among the votes he thought he had. And the naysayers are the typical “teki no teki wa mikata” (enemy of enemy is friend) alliances that are routine in politics. The Republicans are virtually united against the bill (the only defections are the two senators from Maine); the two rogue Democrats, Maria Cantwell (Washington) and Russ Feingold (Wisconsin) are opposed because the feel the bill is not tough enough (Cantwell wants votes on two amendments).
This tempest in a teapot is engaging distraction. Why have political commentators been hesitant to connect the dots between the “no incumbent left standing” movement and the lack of meaningful financial reform?
This piece of his post caught my eye:
All through this time, Chris Dodd filed an amendment to gut the strongest piece of his own bill – the derivatives piece “authored” by Blanche Lincoln. I say “authored” because it was completely obvious that she was handed this tough bill for the benefit of her re-election, and even though that wasn’t secured last night, on the very same night they submitted the weakening piece in the form of a manager’s amendment. Instead of spinning off the lucrative swaps trading desks from the big banks, the bill as amended would let the systemic risk council, made up of agencies who opposed the proposal, “study” the provision, until making a (foregone) decision in two years. Lincoln says she’ll fight against the weakening amendment – oh, we’ll see about that. Yves here. If the derivatives language was indeed provided to Lincoln as a bit of useful pre-election theater, the process is every bit as cynical as I thought. Readers no doubt know I am no fan of big financial firm chicanery, and a card carrying hater of credit default swaps (for background, see here). But the Lincoln amendment is guaranteed not to happen. The industry is correct in howling that implementing it would be hugely disruptive (the dealers themselves are the biggest users of plain vanilla interest rate and FX swaps; their trading volumes would overwhelm any independent swaps dealer). more... http://www.nakedcapitalism.com/2010/05/how-financial-reform-gets-done-not.html
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