RI Senators and Financial Reform

Now that Senate Republicans, under intense political pressure, are allowing debate on financial reform to move forward, we may see something rare in our choreographed democracy - a real, unpredictable jousting over a major bill on the floor.

Senator Jack Reed, the third-ranking Democrat on the Senate Banking Committee, will be a key figure. He is planning to offer up an amendment, with Senator Dick Durbin of Illinois, that would make a proposed Consumer Financial Protection Agency - with oversight of mortgages, credit cards, and other such loans - an independent entity.

Consumer advocates say that would mark a major improvement on Senator Christopher Dodd's bill, which would house the agency in the Federal Reserve. Critics say the Fed's poor oversight played a major role in the financial meltdown.

But Reed faces an uphill battle. With many in the GOP opposed to any iteration of the agency - never mind a stronger, more independent version - he would probably have to scare up a 60-vote, filibuster-proof majority to get his amendment passed.

And then there's derivatives reform. Reed worked for months with Senator Judd Gregg, Republican of New Hampshire, on a provision to regulate the financial instruments, which played a central role in the economic collapse. A surprisingly strong alternative out of the Senate Agriculture Committee, authored by endangered Democrat Blanche Lincoln, has supplanted that bill. But even some Democrats think her bill goes too far. And it could be subject to revision during the amendments process. Reed appears supportive of change. His spokesman, Chip Unruh, said the senator "thinks the language in there is very strong, but could be improved upon."

An unusual coalition of Rhode Islanders that includes progressive advocacy group Ocean State Action and oil-heat dealers who depend on a form of derivatives to hedge against commodity prices - and who want to rein in Wall Street derivatives abuse and add some transparency to the market - is urging Reed to back Lincoln's rules.

Senator Sheldon Whitehouse and other liberal colleagues, meanwhile, are pressing an amendment that would limit the size of big banks. This will be interesting to watch.

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