On Banking Reform, Time for a Deal

For the last three days I've been checking in with Senate sources in both parties about the financial-services bill and been told the same thing: ignore the cloture votes, there's gonna be a deal.

Well, after three such votes, it now seems like it's time to make a deal—which was the plan all along, and why I predicted in the magazine this week that there will ultimately be a bill.

Here's why:

  • The big banks are willing to accept the bill, as long as they can nip and tuck it enough to suit their tastes, which is happening. "We know it's going to happen, and we'll figure out how to live with it," a top banking lobbyist told me on condition that I not identify him. If there are too many intrusive reporting requirements in it for the smaller banks to bear, well, too bad. "Not all the stuff in the legislation is that unreasonable. We'll survive," he said.
  • The new consumer agency will be created, but it won't be a fully independent body and, again, the big banks don't mind as much as smaller lenders and nonbanks.
  • Unlike health care, Republicans and Democrats have been privately working on a deal for months, and there is substantial agreement on a variety of issues.
  • Also unlike health care, the poll numbers have not moved in the GOP's direction as the public debate has worn on. Republicans are on a roll; why risk giving the Democrats material for an advertising campaign? The fall race is shaping up as a contest between two kinds of angry populism: anti-government and anti–Wall Street. The GOP, prospering on the former, doesn't want to give the Dems fodder for the latter.
  • The Republicans will have a chance, in votes and debate on the floor, to highlight elements they either want to change or complain about. They believe they've gotten some concessions and will get more.