Like the health insurance reform bill that passed into law two months ago, the Wall Street reform bill that passed the Senate last night is just another step in the process of strengthening that area of public policy. It is not, by any means, the end of the fight.
In the short term, the obvious next step for Wall Street reform is the conference committee between the House and the Senate. At least on an informal basis, negotiations between the House and Senate will start next week, if they have not begun already. During this negotiation, the focus for progressives be supporting the stronger version of those aspects of the legislation where the House and Senate bills differ. The Wonk Room has an extremely helpful guide that outlines some of the key differences. So does David Dayen.
In the medium term, once President Obama signs Wall Street reform into law, the first step in the struggle to make Wall Street reform stronger is already clear. As Simon Johnson writes this morning, the Merkley-Levin to fully reinstate the Volcker rule has enough support to pass both branches of Congress, and was only defeated for arcane procedural reasons. As such, it is the next move, and could conceivably pass into law later this year:
After nine months of hard fighting, yesterday financial reform came down to this: an amendment, proposed by Senators Jeff Merkley and Carl Levin that would have forced big banks to get rid of their speculative proprietary trading activities (i.e., a relatively strong version of the Volcker Rule.)
The amendment had picked up a great deal of support in recent weeks, partly because of unflagging support from Paul Volcker and partly because of the broader debate around the Brown-Kaufman amendment (which would have forced the biggest 6 banks to become smaller). Brown-Kaufman failed, 33-61, but it demonstrated that a growing number of senators were willing to confront the power of our biggest and worst banks.
Yet, at the end of the day, the Merkley-Levin amendment did not even get a vote. Why?
Partly this was because of procedural maneuvers. Merkley-Levin could only get a vote if another amendment, proposed by Senator Brownback (on exempting auto dealers from new consumer protection rules) got a vote. Late yesterday afternoon, Senator Brownback was persuaded, presumably by his Republican colleagues and by financial lobbyists, to withdraw his amendment.
Of course, Merkley-Levin was only in this awkward position because of an earlier lack of wholehearted support from the Democratic leadership -- and from the White House. Again, the long reach of Wall Street was at work.
But the important point here is quite different. If Merkley-Levin did not have the votes, it was in the interest of the megabanks to have it come to the floor and be defeated. That would have been a clear victory for the status quo.
But Merkley-Levin had momentum and could potentially have passed -- reflecting a big change of opinion within the Senate (and more broadly around the country). The big banks were forced into overdrive to stop it.
The extended floor fight over amendments to Wall Street reform revealed Merkely-Levin to be ripe for the plucking. Unlike the Brown-Kaufman amendment to break up the big banks, and unlike the Whitehouse amendment to allow states to cap credit card rates, Merkkley-Levin has enough support to pass Congress now. As such, it could conseivably be pushed as a standalone bill later this year.
Concurrent with, or perhaps included in, a separate bill on Merkley-Levin, the repeal of the anti-trust exemption for health insurance companies seems like the next logical step for health insurance reform. Such a bill already passed the House in overwhelming fashion. Vermont Democrat and Dark Knight co-star Patrick Leahy had attempted to attach it to the Wall Street reform bill in the Senate, but like many other amendments to this bill it was lost in the shuffle for timing and procedural reasons. Despite objections from Ben Nelson, it is likely that this policy has even more support than Merkley-Levin. The upcoming budget reconciliation bill is another possible means of improving health care, but under current Senate rules regulatory measures like this cannot be included in such a bill.
The ability of the Democratic Party to govern may be sharply diminished after the 2010 elections. If we are serious about strengthening these aspects of public policy even after the main legislative fight is over, passing Merkley-Levin and a repeal of the anti-trust exemptions for health insurance companies as a standalone bills seem like very doable goals for the next five months.