Updated

So reports the Wall Street Journal. The Chris Dodd compromise I mentioned this morning is being dropped from financial reform as Democratic leadership in the Senate scrambles to line up final votes on amendments and a cloture motion this afternoon.

As Jay suggested the other day, there’s a political angle. Senator Blanche Lincoln, facing a primary challenge from Bill Halter, is widely speculated to have introduced biting derivatives language last month at least in part to shore up her left flank — she hopes her crusade against Wall Street will endear her to the primary crowd. Tuesday night, as Arkansas Democrats sent Lincoln and Halter to a June 8 runoff, financial reform architect Dodd floated a compromise that would essentially let the most controversial portion of Lincoln’s derivatives plan die a slow death.

Now, with Lincoln’s political fate still up in the air, Dodd has dropped the plan. Why? The Senate leadership needs 60 votes to move forward. Republicans are beginning to buck after a few weeks of detente, and some Democratic Senators feel their pet causes are getting short shrift. But it’s NOT Ben Nelson this time. Byron Dorgan was incensed his amendment banning “naked” derivative swaps, basically a financial bet for betting’s sake, couldn’t get a full vote — it was tabled last night. Maria Cantwell’s (and John McCain’s!) amendment reinstating the Glass-Steagall division between simple commercial banking and financial exploits hasn’t gotten an up-or-down on the floor — it’s opposed by bankers and the Obama administration alike. Tom Harkin’s effort to limit bank ATM fees was turned away as well. Others have merely had their measures bumped down the road; Sam Brownback’s auto-dealer exemption from consumer finance regulation and Jeff Merkley’s expansion on the Volcker rule will be taken up after debate is formally closed.

Reid’s tight schedule and Dodd’s careful stewardship of the process have allowed them to avoid votes on measures they fear might jeopardize the final product. But stripping Lincoln’s derivatives has proved politically unfeasible at every turn. An outspoken Lincoln revolt, fueled by primary insecurity, would have threatened to sink the Senate bill at the 11th hour.

There’s still time left before the Senate legislation is finalized, plus the likelihood of a conference report to go through and House and Senate votes after that, but the survival of Lincoln’s fully in tact derivatives plan is surprising to say the least.