CORRECTION: “Volcker Rule” NOT EXACTLY DOA In Senate, Suggests Shelby (R-Ala.)

By Michael Scherer | @michaelscherer | February 1, 2010 | +

The post that follows below was based on an report by dealReporter, which has been contested by Sen. Shelby’s office. A spokesman for Shelby, Jonathan Graffeo, sent the following statement: “Sen. Shelby opposes the bank tax proposal. He has not, however, expressed support for or opposition to the Volcker rule proposal. He said the proposal requires examination by the Banking Committee, which is why he called for hearings on the matter.”

The original post after the jump.

That was quick. Sen. Richard Shelby, the ranking Republican on the Senate Banking Committee, is throwing cold water all over President Obama’s bank bashing populism of last month. According to dealReporter,

A proposal by former Federal Reserve Chairman Paul Volcker to limit bank’s proprietary trading will be either be dropped or significantly modified in the Senate, lawmakers and staffers told dealReporter. Senate Banking Committee ranking member Richard Shelby (R-AL) said he opposes the so-called Volcker rule and the Obama administration’s call to levy a USD 90bn tax on banks. . . . Speaking to this news service on Thursday, Shelby said if Democrats push forward with the proposals they risk unravelling much of the bipartisan support already reached regarding the passage of financial regulatory reform in the Senate. Shelby said that the Obama administration risks losing Republican support for the bill if they begin to “politicise” the issue.

This could just be a negotiating position, but the signs do not point to much optimism. A staffer for Chris Dodd, the Democratic chairman of the committee, is quoted later in the story saying of his boss, “He is not going to risk bipartisan support to make the White House happy.”

So much for the suspense.

In other (mostly unrelated) news, financial sector stocks rose on Monday, driven by enthusiasm for regional banks.

@TIMEPolitics

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kevin

Then to hell with bipartisan support for financial reform in the Senate.
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Let the Republicans run for re-election on their record of standing up for giant banks shelling out seven-figure bonuses. Good luck with that.
deconstructiva

So call out Shelby’s defense of big banks. That’ll go over well.
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MS, like some of us have asked KT about HCR reconciliation (probably to her annoyance + tears), what parts of finance reform can be done under recon? Or perhaps – disagreeing on this issue about KT’s opinion on eliminating the filibuster – this can be a better topic on which to change the fil. rules or even abolish it.
conversets

Dodd didn’t want to buck the banks in the first place; who do you think he’s gonna lobby for when he loses in November. Shelby is just cover.
http://elvisberg.wordpress.com Elvis Elvisberg

President Obama’s bank bashing populism
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Respectfully, Michael, I think this is an unfair and partisan description of the proposal. Very knowledgeable people, who love capitalism and the stock market and apple pie and all the rest, have proposed and supported these recent proposals.
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See, e.g., http://www.ritholtz.com/blog/2010/01/why-paul-volcker-is-once-again-the-man/
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Now, that hardly means that everyone in the world needs to support them, but your tone implies that they were some Bolshevik plot, or at least Potemkin stunt. That’s simply not the case.
http://thepage.time.com/2010/02/01/shelby-throws-cold-water-on-bank-measures/ Shelby Throws Cold Water on Bank Measures – The Page by Mark Halperin – TIME.com

[...] Republican on Banking says Volcker Rule, TARP tax are non-starters in the Senate. tiiQuigoWriteAd(755778, 1290697, 600, 240, [...]
kevin

Well said.
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MS sounds like the Monopoly tycoon on the “Simpsons” storming out of the town hall meeting because he’s had it with “all this fat-cat bashing!”
Matt

How is forcing banks to repay taxpayer money (that Republicans said they opposed but then voted ford) a “politicized” issue? The GOP had better be prepared to get burned at the polls if they do vote this down.

http://www.political-buzz.com/
http://twitter.com/michaelscherer Michael Scherer

You are right, that the proposal has merits that are well regarded. “bank bashing populism” describes the politics of Obama’s turn. See more here. http://www.time.com/time/politics/article/0,8599,1957290-3,00.html
stuartzechman

Michael Scherer:
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Is this bank tax the most or the least important element of financial reform or of financial reform legislative proposals currently under consideration?
stuartzechman

Thanks so much for responding to commentary with that helpful link and clarification, Michael Scherer.
apr2563

Dodd isn’t running in November. Ever since he announced his decision he has been running away from reform. I can’t help wondering if K Street or becoming a banking board member isn’t in his future.
apr2563

It is just the passive aggressive MS in action.
deconstructiva

Oh, sure. Michael won’t answer a senate procedural q. whereas Karen often will when she’s asked.
freeinpa

“How is forcing banks to repay taxpayer money”

Most of the banks have payed back the TARP money with interest. The ones who have not paid Fannie, Freddie, GM (Government Motors) and Chrysler will still not pay anything and that TARP money has gone down a rat hole.

Taxing banks that have already re-payed is a punitive gesture and nothing more. And what also is conveniently forgotten, is some of those banks were forced by the government to take TARP money.

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What the entire tax scheme demonstrates is the Obama is against capitalism and punishes success and will take punitive action against those to support political allies. Let the Democrats run on that.
square1

Shorter MS: It is “bank-bashing populism” to refuse to subsidize banks’ private, unregulated investments with cheap capital and government bailouts.
jcapan

“Shorter MS: It is “bank-bashing populism” to refuse to subsidize banks’ private, unregulated investments with cheap capital and government bailouts.”
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Bailouts (i.e. socializing of losses, using your tax dollars to bail out the parasites f’ing you over at every turn). Worship your lord when he goes by in the carriage.
http://elvisberg.wordpress.com Elvis Elvisberg

Thanks for responding, and thanks for the link, Michael.
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“Can Bank-Bashing Help Obama?” is a frame that obscures the actual policy issues involved, instead relaying untethered speculation about how it might “play.” We learn that “[t]he political aides were eager to adopt a more populist tone,” but why? Were the existing policies ineffective?
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At the end, you write, “Financial reform, like health care reform, is truly complex. It’s hard to explain controversies over pre-emption or end users or proprietary trading” Well, maybe, but did we give up when the Germans bombed Pearl Harbor? Maybe if you tried to explain those things, people would understand them better.
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Thanks for your reply, and for spelling out what you were getting at.
http://www.leanleft.com/archives/2010/02/02/9000/ Lean Left » Blog Archive » A Good Fight to Lose

[...] GOP doesn’t want the Volker rule or the bank tax to pass: A proposal by former Federal Reserve Chairman Paul Volcker to limit bank’s proprietary [...]
http://wonkroom.thinkprogress.org/2010/02/09/corzine-bank-tax/ Wonk Room » Corzine Endorses Bank Tax: Banks Should ‘Pay Back’ And ‘Prepare For The Next Financial Crisis’

[...] outright, adding that if the Democrats were to pursue implementing the tax, they would “risk unravelling much of the bipartisan support already reached.” Republicans as a whole, in fact, have been courting support from the banks, [...]