President Obama called Wednesday for more oversight of derivatives — the financial products that helped sink insurance giant AIG — when he met with Congressional leaders Wednesday at the White House to push for financial reform legislation.
“[T]he problems of the future will rest on the steps we take to address derivatives now,” according to a statement by White House spokesman Robert Gibbs. “The president reiterated his belief that we are open to ideas and eager to work with anyone who is willing to work with us regardless of party.”
It did not appear from statements by GOP attendees after the meeting that the two sides had made much progress toward working together.
“We have serious differences of opinion,” said Sen. Republican Leader Mitch McConnell, R-Ky., speaking to reporters after the meeting. “[This] is a bill that actually guarantees future bailouts of Wall Street banks.” In recent days, McConnell has cited as evidence the reform bill’s proposal that a $50 billion fund be created from fees paid by large financial institutions to cover the costs of future wind-downs.
“It’s obvious the Republicans are saying ‘no’ again to progress in America,” responded Sen. Harry Reid, D-Nev., in later remarks to reporters.
Sen. Chris Dodd, D-Conn., who sponsored the bill now under consideration in the Senate, blasted Republicans on the Senate floor Wednesday for spreading “outright falsehoods” about the bill’s contents. In response to the GOP accusation that the bill perpetuates bailouts, Dodd asserted that “the bill imposes tougher standards on large, risky Wall Street firms” and “eliminates the federal government’s ability to bail out financial companies and it requires that the financial firms write their own shut down plans and even pay for the liquidation process if it’s needed.”
The highly partisan tone to the proceedings thus far suggests tough passage for the Dodd bill. With both parties seeking to capitalize on the passage of health care reform with their supporters and looking ahead to the November midterm elections, debate over financial legislation will likely be intense between now and Memorial Day, when Congress breaks again and campaigning for November steps up.
Beyond the debate over derivatives oversight, the question of what to do about “too big to fail” firms, consumer protections, and the role of the Federal Reserve will likely continue to be central to the negotiations, as they have been for months.
You can find a graphic from the New York Times that compares the House and Senate financial reforms bill here.