Bank Bill Tests GOP Unity
Republican leaders may have trouble getting their troops to all say no to a financial regulatory overhaul.
The Republican strategy on President Obama’s plan to overhaul the bank regulatory system became pretty clear this week when Senate GOP leader Mitch McConnell attacked the bill as another bailout of Wall Street. For a while, it seemed we were in for a replay of the health care debate -- with all the intentionally misleading characterizations of what the bill might do.
But then McConnell was called up short -- not by the Democrats, but by Sen. Bob Corker, a Republican from Tennessee who had been working with Democrats on a compromise banking bill. "This is like in the health care debate [with] death panels," Corker said.
Corker said there are loopholes in the draft bill that could lead to bailouts, but it’s no big deal. "The rhetoric around this, an issue that could be dealt with literally in about five minutes, is overheated," he said.
McConnell’s claim that the bill as approved by the Senate Banking Committee encourages taxpayer bailouts is based on a provision creating a $50 billion fund to help dismantle failing banks. The fund would be drawn from fees paid by the banks, but McConnell charges it could still leave taxpayers on the hook. Obama never supported the fund and has already made it clear that he’s willing to see it dropped from the bill, but Republicans don’t seem to be listening.
Instead, they are clearly hoping for a replay of the health debate, which they think worked to their advantage. By jumping on that measure early and taking advantage of Obama’s slow approach, they were able to characterize the bill as a government takeover of health care that would lead to higher premiums, higher taxes, the gutting of Medicare and a collapse of the medical profession. Like the death panel claim of Sarah Palin, none of that was ever true, but Republicans and conservative talk radio hosts convinced a lot of Americans that it was.
Pulling off the same stunt for bank regs is going to be a lot harder for any number of reasons. For one thing, Americans favor legislation to rein in Wall Street -- by margins far larger than those opposed to even a mischaracterized health care bill. In the health care debate, it was the Democrats who were on the spot, especially the few dozen who represent more-conservative districts. They had to be persuaded to vote for a bill their constituents didn’t want. Now it’s the Republicans who have to vote against a bill their constituents do want.
To get around that, the GOP has to persuade the public that the bill is another giveaway to the financial industry. That’s a hard sell when that same industry is spending millions and pulling out all stops to stop the bill. It’s not an impossible task -- the financial regulatory bill deals with issues even more arcane to most Americans than the health bill, so many voters will listen to whoever they most believe. But even with that, it’s a hard sell, and it’ll be even harder if Republicans like Corker refuse to go along and if the Wall Street bankers that Main Street Americans seem to hate keep fighting the bill.
The Republican gamble is a big one. If they compromise now, they could get a bill much more to their liking. If they dig in their heels but can’t hold on to every GOP senator, they’ll end up with a bill that is much tougher on their banking allies.
More to their concern, they could pay a price for their resistance in the elections. Not only is the GOP adding to its reputation as the party that just says no to everything, but an Obama victory on the bill would give Democrats what may be an effective populist campaign issue.