White House, Dems seized on Wall Street reform as a winner

President Barack Obama and congressional Democrats on Wednesday firmly seized on financial reform as a politically winning issue at a time of economic uncertainty.

Obama and Democrats appeared to be spoiling for a fight after a White House meeting with Republicans on the issue, daring the GOP to stand behind a reviving Wall Street and against legislation intended to offer reforms to the sector after the devastating financial crisis.

{mosads}Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-Nev.) characterized Republicans as beholden to big banks, while White House press secretary Robert Gibbs said bipartisanship sometimes must take a backseat to good policy.

Sen. Chris Dodd (D-Conn.), the author of the Senate bill, said he did not believe all 41 of the Senate’s Republicans would have the stomach to vote against his bill.

“I don’t think a number of Republicans want to be led by the nose into the pit,” Dodd said.

Democrats have wanted to talk about financial reform ever since Obama signed the healthcare bill into law. They appear to believe the issue will resonate with voters in a way the healthcare bill did not.

Democratic pollster Celinda Lake on Wednesday told reporters that Wall Street reform could help Democrats with “angry seniors” and close the enthusiasm gap with the GOP.

“Seniors do think they were really hurt by what happened on Wall Street. So that’s a big plus for us,” she said.

Even before the White House meeting with lawmakers from both parties, Obama was warning Republicans that failing to proceed with legislation could leave the country unguarded in the case of another financial collapse.

 “All of us recognize that we cannot have a circumstance in which a meltdown in the financial sector once again puts the entire economy in peril,” Obama said.

 After the meeting, the administration and its allies continued to hit Republicans hard, with Treasury Secretary Tim Geithner joining Gibbs at the daily press briefing to highlight the issue further.

 Republicans accused the White House of trying to put them in a corner.

 Senate GOP Leader Mitch McConnell (Ky.) accused the White House of trying to “jam” the GOP by pulling Senate Democrats away from the negotiating table, while Sen. Scott Brown (R-Mass.) charged Obama with using Wall Street reform as a “wedge issue.”

 Brown, who has voted with Democrats on some issues since winning Sen. Edward Kennedy’s (D) old seat in a surprise, said he couldn’t support the bill as written.

Republicans also continued to argue that Dodd’s bill would create endless taxpayer bailouts for Wall Street because of a $50 billion industry-supported fund intended to help dissolve failing firms whose collapse would threaten the economy. They argue taxpayers could be on the hook if it takes more than $50 billion to dissolve a failing firm.

 Geithner stressed that the only guiding principle is that taxpayers not be on the hook for keeping banks afloat should there be another crisis.

“The basic principle for us is going to be to make sure people understand that we will not leave the taxpayer exposed to any risk of loss,” Geithner said.

Geithner and Gibbs said Dodd had spent months working with Sen. Richard Shelby (R-Ala.), the ranking member of the Banking Committee, as well as panel member Sen. Bob Corker (R-Tenn.) in an effort to win a deal.

 They also noted that Dodd and Shelby were scheduled to meet again Wednesday evening.

Democratic senators held a series of private Capitol Hill meetings on Wednesday, industry sources said. The bill has yet to be finalized, and the industry expects centrist Democrats to weigh in on contentious issues such as new regulations in the multitrillion-dollar market for financial derivatives.

Reid disputed McConnell’s complaints, dismissing them as “a figment of his imagination.”

But Democrats also sent out the loud message that Obama was willing to bend very little on Wall Street reform.

 Gibbs said Obama told Republicans at the White House meeting that he “would not accept bad policy in pursuit of bipartisanship,” and also suggested Republicans were looking for loopholes for large banks and other financial interests.

Obama has “made clear that bipartisanship should not be equated with an openness to lobbyist loopholes and special interest carve-outs, and that he would be unwilling to negotiate on some key issues,” Gibbs said.

Gibbs said the meeting was not contentious, and that McConnell emerged “several hundred degrees hotter on the oven than it was in the room.”

At the same time, Gibbs raised the political stakes himself by emphasizing the timetable Obama sees for completing the legislation.

“It’s untenable that Congress would go home to campaign for reelection in November answering questions that the same rules that were in place two years ago, the regulatory structure that led to what we’re dealing with, that those would still be in place,” Gibbs said.

 “I don’t even think those that have clearly sided with the financial industry and want to slow this down think that’s a good solution.”

Reid also applied campaign rhetoric to the issue, telling reporters: “It’s important the American people realize it’s difficult to work with the Party of No.”

Silla Brush and Sean J. Miller contributed to this story.