Democrats Defy Wall Street, GOP on Bank Reform

Banks trying mightily to kill restrictions on derivatives
By Kevin Spak,  Newser Staff
Posted Apr 14, 2010 11:25 AM CDT
Democrats Defy Wall Street, GOP on Bank Reform
John Podesta, left, a former White House Chief of Staff under the Clinton administration, talks with Sen. Blanche Lincoln, D-Ark., following a Democratic luncheon, March 16, 2010, on Capitol Hill.   (AP Photo/Haraz N. Ghanbari)

(Newser) – Democrats defied Wall Street lobbyists’ push to kill new reforms on derivative trading yesterday, and got an earful from Republicans for their troubles. Goldman Sachs, JPMorgan, and Morgan Stanley have been leaning heavily on Blanche Lincoln’s Agriculture Committee to scrap a plan to force derivatives—which, incidentally, played a major role in the financial crisis—to be traded on an open exchange, rather than via backroom deals, the Wall Street Journal reports. When Lincoln refused to play nice, Republicans rioted.

“They want to jam through a totally partisan bill,” Mitch McConnell told Politico, saying the Democrats’ bill would “guarantee perpetual taxpayer bailouts of Wall Street” and meet with “overwhelming Republican opposition.” Democrats, who had hoped for a bipartisan bill, were flummoxed. One White House official wrote that the bill explicitly prohibited bailouts, and noted that pollster Frank Luntz had recently advised Republicans to call any reform measure a "bailout." McConnell, she concluded, “reads Luntz’s lines and follows Wall Street’s orders.” (Read more Frank Luntz stories.)

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