Bipartisan flare ups providing tangy sound bites have increased tension over the financial reform bill, which is nearing a vote in the U.S. Senate.
After two weeks of debate that was void of filibusters or tabling motions on more than a few amendments — 325 have been filed — minority leader Mitch McConnell, R-Ky., called the 1,400 page bill “a massive government overreach.” He said Democrats were accepting their “marching orders,” from the White House, as several key Republicans said they would vote no on the overhaul bill, The New York Times reported Wednesday.
Call it last minute jitters. Sen. Christopher Dodd, chairman of the Senate Banking Committee and the lead author of the bill put in his own last-minute compromise Tuesday three minutes before the deadline, The Washington Post reported.
Dodd’s amendment reconsidered the issues of derivative trading, pulling back from the ban proposed by Sen. Blanche Lincoln with a measure that passed the Senate Agriculture Committee on a 13-8 vote that included one Republican.
Dodd’s proposal would erase the ban on derivative trading for banks tapping into federal funds, like discount loans from the Federal Reserve, by putting the issue up for study by a council of regulators led by Treasury Secretary Timothy Geithner.
At that point, it would likely be conveniently killed entirely, as Geithner and other regulators have publicly stated their opposition to the ban.
Rhetoric in Washington requires a rhetorical response, and majority leader Harry Reid, D-Nev., was able to provide one. “We have a strong bill to crack down on Wall Street gamblers, end too big to fail and protect consumers. Republicans have made it clear that they have no interest in accountability or fairness,” Reid said.
The bill is still expected to pass. If so, it goes to a joint committee to iron out differences between the bill and a similar measure passed in the House in December.
In other financial developments, stock markets were widely lower on Asia and Europe Wednesday, as concern over government debt continues to re-define the global economic recovery.
Investors were puzzled by German regulator BaFin’s ban of naked short selling Tuesday, a step that provoked a what-do-they-know-that-we-don’t-know reaction, given it was unexpected and no other regulators appeared to be considering it, the Times reported.
Naked short sales, essentially, a side bet on an asset with the expectation that the asset will lose value.
The ban begins Wednesday and continues through March 31, 2011.
In Washington, the Securities and Exchange Commission announced it would employ circuit breakers to stop trades on individual shares that were falling precariously or rising too fast.
Unable to fully explain the sudden 600-point drop in the Dow Jones industrial average May 6, SEC said stocks that rise or fall 10 percent or more within five minutes would be subjected to a five-minute pause.
The system is temporary and does not take effect until after a mandatory public hearing period of 10-days.
In international markets Wednesday, the Nikkei 225 index in Japan lost 0.54 percent, while the Shanghai composite index fell 0.27 percent. The Hang Seng index in Hong Kong fell 1.83 percent, while the Sensex in India lost 2.77 percent.
In Australia, the S&P/ASX 200 dropped 1.87 percent.
In midday trading in Europe, the FTSE 100 index dropped 2.15 percent, while the DAX 30 in Germany fell 1.98 percent. The CAC 40 in France lost 2.71 percent, while the pan-European DJ Stoxx 50 fell 2 percent.
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