For anyone interested, tune in C-SPAN3 right now to watch the conference on the financial regulatory reform bill live. The House and Senate versions are already very similar but the largest sticking point remains language authored by Senate Agriculture Committee Chairman Blanche Lincoln requiring banks to spin off their in-house derivatives trading desks. The provision is opposed by the White House, regulators, the Fed and most Republicans. It’s supported by most Democrats and is popular with the grassroots.
With most pundits writing the Arkansas Democrat’s political obituary earlier this week, it was expected that the provision would wither away after the loss of its champion. Indeed, even before Arkansas polls closed on Primary Night earlier this month, Senate Banking Committee Chairman Chris Dodd was trying to pry the provision out of the bill to much uproar. But Lincoln’s surprise victory, Senator Dick Durbin, a supporter of the provision told Politico’s Carrie Budoff Brown, strengthens her position in the conference to keep it in.
Thus far no startling debates or revelations have been made in the conference: they’re still on opening statements. And if anything’s predictable in Washington it’s the fact that they’ll leave the most controversial stuff for last (and more than likely will work out a backroom solution on the derivatives problem before acting it out on CSPAN). The Wall Street Journal reported today that several compromises are in the works, including one that would replace Lincoln’s provision with the Volcker rule which would restrict banks from using their own capital to make speculative trades. So, it remains to be seen if the new “comeback kid” can also resurrect her provision from the shallow grave it’s been dwelling in the last few weeks. And given that this provision is the $10 million scalp claimed by the unions that opposed Lincoln and that Lincoln ran an anti-Wall Street campaign in the final weeks of the primary, her reelection may depend on it.