After months of awkward bipartisan feelers over financial reform, it’s bench-clearing time at last. That’s pretty much what’s happened over the last few days, especially since Senate Minority Leader Mitch McConnell launched the GOP’s strategic assault on Democratic reform bills by calling them bailouts of Wall Street—eagerly parroting the line put out by GOP pollster Frank Luntz—and Banking Committee Chairman Chris Dodd responded by saying his patience is at an end. On another front, Sen. Blanche Lincoln, chairwoman of the Agriculture Committee, appeared to end her own efforts at compromise with Republican Saxby Chambliss over the regulation of derivatives; she wrote a letter (read it here) assuring progressive Democratic colleagues, Maria Cantwell, Byron Dorgan, and Dianne Feinstein (along with moderate GOP Sen. Olympia Snowe) that she was fully behind a tough bill, one that excludes most exemptions for derivatives “end users.”
The bottom line: we’re about to witness a reprise of the war over health care, possibly even with GOP laggard Snowe playing a similar role of being the last Republican to dance with the idea of bipartisanship. The question is, will the GOP tactic work this time? While there are many critics of the Democrats’ financial-reform legislation, even most of them agree it’s absurd to suggest that the bills ensure perpetual bailouts of Wall Street. On the contrary, the legislature creates a resolution authority that would permit Washington to liquidate many more financial institutions. (In addition to which, most of the big bailouts during the height of the financial crisis were launched by the Republican Bush administration.) Still, political rhetoric six months out from an election doesn’t necessarily have to reflect reality. Both sides will portray themselves as being on the side of Main Street versus Wall Street. My guess is if the Republicans go so far as to block any reform bill at all, offering nothing in return—as they did on health care—they’ll lose this one.