By CARRIE BUDOFF BROWN, Politico
But a controversial proposal by Sen. Blanche Lincoln (D-Ark.) that would force investment banks to spin off their derivatives businesses appears to enjoy a quirky protected status until Tuesday â€” primary election day in Arkansas, when Democrats decide if Lincoln can go for a third term.
Trying to shore up her left flank, Lincoln went further than the White House, the House and the Senate Banking Committee to crack down on derivatives, the complex financial instruments at the heart of the 2008 economic crisis.
And Lincolnâ€™s in no mood to compromise just days before her May 18 primary.Â So Democratic leaders have held back from going too far to force changes in her bill and risk embarrassing Lincoln ahead of the vote, according to multiple Senate aides and industry officials familiar with the negotiations.
The upshot is that a major provision of the regulatory reform bill is in limbo, the consequence of a toxic election year for incumbents.
Every legislative battle is suffused with electoral politics. But with an unusually large number of incumbents fighting for reelection, the sweeping Wall Street reform bill has morphed into the vehicle of choice for senators to prop up their standing back home.
â€œCampaign season has begun, and it is on steroids,â€ said Jennifer Duffy, a political analyst who monitors Senate races for the nonpartisan Cook Political Report. â€œIt started earlier, and you are seeing a much bigger impact on the legislative process.â€
Senate Majority Leader Harry Reid (D-Nev.) had wanted to finish the bill by the end of this week, but since it is taking longer than expected, the pressure to force a resolution on derivatives before Tuesday has diminished since earlier in the week, aides said. Senators are also attempting to clear away other key amendments first.
But Senate aides and industry officials acknowledge the delay on derivatives stems, in part, from sensitivities to Lincolnâ€™s tough reelection fight.
Itâ€™s just one sign of the hyperkinetic political maneuvering surrounding the bill.
Populist proposals that may never have received votes in the past, let alone pass, are dominating the floor debate. Playing to voter anger toward Big Business, senators want to break up big banks, create a powerful consumer protection agency and force credit card companies to slash their ATM fees and cap interest rates.
Read more: http://www.politico.com/news/stories/0510/37170.html#ixzz0noQ1Ybqu
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