Cracks have appeared in Senate Republicans' solid opposition to efforts to curb Wall Street's reckless behavior.
Strong regulation of derivatives advocated by Sen. Blanche Lincoln gained the support of GOP Sen. Charles Grassley in the Agriculture Committee on Wednesday. Other Republicans talk of being close to a deal with Democrats on a comprehensive bill. Even Minority Leader Mitch McConnell, who had lined up the GOP caucus behind a filibuster of the bill last week, began making conciliatory noises although he blocked efforts Thursday to start floor debate.
McConnell claimed that his tough tactics had pushed Democrats to reach out to Republicans to try to salvage the bill, but that assertion is dubious. He's been arguing that the Democrats' bill virtually guarantees future bank bailouts, a toxic notion to most Americans, but President Obama forcefully rebutted that contention over the weekend.
More credible to the GOP's shift in tone are two words: Goldman Sachs. Wall Street's rapacious policies were highlighted by the Securities and Exchange Commission's civil suit accusing Goldman of deceiving investors in a fund larded with subpar mortgages chosen by a hedge fund manager betting that the housing bubble would burst. Although Goldman stoutly denied the charges, this week it and Citicorp reported robust quarterly earnings, which merely emphasized the chasm between the continuing boom on Wall Street and the bust on Main Street. That juxtaposition was certainly not lost on Republicans, concerned in an election year about being seen as doing the bidding of big banks.
Further belying McConnell's claims that his brinkmanship influenced Democrats is the likelihood that the Senate bill will be strengthened, with the addition of Lincoln's plan to trade derivatives openly and restrict big banks' ability to deal in them.
The shifting political winds in the Senate brighten the prospects of significant financial reform to curb Wall Street excesses that have so burdened average Americans.