Financial reform bill could be torpedoed

Thanks to one change the financial reform bill picked up in committee, it may now end up dead.

The financial reform bill has been seriously imperiled by the addition of $19 billion in bank levies while the bill was being hammered out in committee. According to a report from Business Insider, Massachusetts Senator Scott Brown will vote against the Dodd Frank Act because of the tax. That tax was added after both the House and Senate passed their versions of the bill, which were designed to help consumers reduce debt.

Business Insider points out that the tax is relatively small, since the money it asks for is spread across the entire American financial system. The tax was built into the bill to help pay for its implementation and enforcement, which therefore means that without it, the bill will cost American taxpayers $19 billion. However, despite the fact that Brown voted for the bill a week ago, he now opposes it, based solely on this tax.

"I’ve said repeatedly that I cannot support any bill that raises taxes," Brown said in a statement.

Without Brown, the bill’s passage is unlikely. Because every law that comes up for vote in the Senate these days requires 60 yeas to get passed, the Dodd Frank Act required two Republican votes, which it had a week ago. However, the death of West Virginia Senator Robert Byrd means that Democrat now requires three Republican votes, and Brown, one of the few from his party to vote for the law initially, has unexpectedly changed his position.

A report from Bloomberg said that lawmakers will reconvene to discuss the fee, which was added by Massachusetts Representative Barney Frank and signed off on by Senate Banking Committee Chairman Chris Dodd, and Democrats are backtracking on its importance.

“My hope is that our colleagues will see this as a more attractive pay-for proposal than the one we adopted about four or five in the morning,” Dodd told Bloomberg.

The proposed fix will pay for the bill by eliminating the Troubled Asset Relief Program, and raising the level of funds the FDIC must hold in reserves to insure bank deposits. The elimination of TARP alone is expected to pull together about $11 billion. The bill’s final approval is expected sometime this week, and while Democrats had hoped to get it on President Obama’s desk before July 4, that seems unlikely now.