Populism challenged in Wall Street reform bill

The Senate is moving to dampen the loudest
populist cries
in the Wall Street overhaul.

In quick succession on Thursday, senators softened
an
amendment requiring new audits of the Federal Reserve and then voted
down an
amendment to cap the size of the nation’s biggest banks.

The populist outrage at Wall Street banks and the
federal
regulators that bailed them out appears to be reaching its limit. Plenty
of
other amendments fiercely opposed by Wall Street could still pass, and
the
underlying bill aims directly at the biggest financial institutions.

{mosads}But the two amendments on Thursday had received
huge
populist and grassroots support.

Sen. Bernie Sanders (I-Vt.), the principle backer
of the Fed
audit amendment, agreed to alter his legislation to require audits of
the
bank’s activities during the financial crisis. An earlier version of the
amendment met stiff opposition from the White House and Federal Reserve,
which
argued the legislation would compromise the independence of U.S.
monetary
policy. The amendment had drawn strong support from conservative
Republicans and liberal Democrats.

Sanders said the new legislation would still force
the Fed
to disclose its many steps to bail out banks. Sanders said on the Senate
floor
that preserving the independence of the Fed was important to him.

Rep. Ron Paul (R-Texas), the libertarian critic of
the Fed,
said Thursday on his Facebook page that Sanders “sold out” on the
amendment. The liberal Firedoglake blog chastised Sanders as well.

But the Treasury Department and Senate Banking
Committee
Chairman Chris Dodd (D-Conn.) quickly lent support to the new amendment
from
Sanders.

The Senate held off on final voting on the Sanders
amendment. But later on Thursday, the Senate shot down a high-profile
effort to
impose additional restrictions on big banks.

Sens. Sherrod Brown (D-Ohio) and Ted Kaufman
(D-Del.)
proposed legislation that would have limited the size of big banks. They
and
other supporters argued that clear caps on the size of banks are
necessary to
fully rein in Wall Street’s excesses.

The amendment drew strong backing from consumer
advocacy
groups.

But the Senate voted it down on a 33-61 vote. The
amendment
split Democrats, with 27 opposing the measure. Sen. Joe Lieberman
(I-Conn.)
also opposed the measure.

Sens. Tom Coburn (Okla.), John Ensign (Nev.)
and Richard
Shelby (Ala.) were the three Republicans to support the amendment.