Financial Regulation: Big Money GOP v. Obama

President Obama should have had this fight a year ago, but so be it.

This could be the GOP’s downfall, as Tea Partiers peal off the GOP’s coalition.

Obama, Republicans square off on financial-regulation bill

By David Cho and Scott Wilson

President Obama accused Republicans on Friday of trying to carve out “special loopholes” for the financial sector in regulatory reform legislation and warned they would soon face a choice: whether to side with an unpopular industry or with ordinary Americans.His pointed comments came as all 41 Senate Republicans signed a letter criticizing a bill before the chamber to overhaul financial oversight.

They said the measure would stifle the economy by giving the government “unlimited regulatory powers” and called on the administration to start a new round of negotiations. Republicans added that they have the votes to prevent Democrats from bringing the bill to the floor.

At the same time, the administration responded to an initiative from its left flank. Treasury Secretary Timothy F. Geithner sent a letter to Capitol Hill signaling his skepticism about a far-reaching measure unveiled Friday by Senate Agriculture Committee Chairman Blanche Lincoln (D-Ark.). Lincoln proposed banning big Wall Street banks from trading lightly regulated financial instruments known as derivatives. Geithner said he wants tough new rules as well, but he stopped short of supporting an outright ban, which has gained traction among some liberal Democrats.

 The efforts to steer the legislation along a centrist course are not only driven by necessity — the White House needs at least one Republican and all Democrats in the Senate to overcome a filibuster — but also reflect the moderate views of many of Obama’s senior economic advisers.

The bill headed to the Senate floor largely reflects their proposals, which would keep the structure of the financial system largely in tact, with only a few wholesale changes, but would impose clearer and tougher rules on business activities. Big banks, for instance, would have to set aside more capital to cover unexpected losses, money they otherwise could use to earn profits. …

The White House continued its outreach to Republicans who it hoped would break ranks and vote for the bill. On Friday, however, the GOP presented a unified front. Republican senators wrote in a letter to Senate Majority Leader Harry M. Reid (Nev.): “We are united in our opposition to the partisan legislation.”