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- Lying police? Missing files, lost evidence: Newspaper investigation reveals glaring details in David Robinson case (7/16/17)2
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- 49-year-old homicide victim found in Cape (7/20/17)
- Sikeston detective's files about murder suspect missing from DPS (7/18/17)1
- Witnesses make claims of officer corruption in Box/Robinson case (7/17/17)1
- Cape city, civic leaders unveil downtown trolley service (7/14/17)6
- Park official: 5-year-old girl nearly drowns at Cape Splash, taken to hospital (7/12/17)4
- Business notebook: Jackson boutique has regional roots in retail (7/17/17)
Senate rejects GOP consumer, Democrat bank break-up plans
WASHINGTON -- Two contentious regulatory measures -- one to dilute consumer provisions and the other to break up large banks -- failed in the Senate on Thursday in separate defeats for Republicans and liberal Democrats.
Prodded by President Barack Obama, the Senate rejected a Republican consumer protection plan that would have diluted a central element of the administration's financial regulation package.
The 61-38 vote cleared one of the sharpest partisan disputes over a sweeping overhaul of financial regulations.
Democrats and the president argued that the GOP proposal would have "gutted" consumer protections. Only two Republicans -- Sens. Olympia Snowe of Maine and Charles Grassley of Iowa -- joining Democrats to defeat the GOP measure.
Democrats and Republicans joined, however, to reject a proposal to limit the size of the nation's largest banks as a means of reining in the financial sector. That vote was 61-33, with 33 Republicans and 27 Democrats and one independent voting to kill the measure.
In both votes, the Obama administration prevailed. It had forcefully pressed to kill the GOP's consumer proposal and had more gently argued against the bank size limits, arguing that size alone was not at the root of the 2008 financial crisis.
The bank size limit, proposed by Democratic Sens. Sherrod Brown of Ohio and Ted Kaufman of Delaware, was staunchly opposed by the bank industry. Brown and Kaufman argued that cutting banks down to size would end firms deemed "too big to fail."
Brown and Kaufman targeted the six biggest banks -- Bank of America, JPMorgan Chase, Citigroup, Goldman Sachs, Wells Fargo and Morgan Stanley. Together, they have assets that total more than 60 percent of the nation's gross domestic product.
The proposal would limit the size of banks to assets of no more than 2 percent of GDP and to deposits of no more than 10 percent of the nation's total deposits.
"When a few megabanks dominate our financial system, the downfall of any of them can mark the downfall of our entire economy," Brown said.
The pending Senate bill, written largely by Senate Banking Committee Chairman Chris Dodd, does not impose size limits but would require large financial firms to split up if a council of regulators determine they pose too grave a threat to the economy.
"The real question should be the level of interconnectedness and the risk taking we saw in the crisis of 2008," said Sen. Mark Warner, D-Va.
Following last-minute adjustments, a separate proposal to audit the Federal Reserve that the Obama administration once opposed was attracting broad support from conservatives and liberals alike. The Senate was expected to vote on that measure next week.
Momentum for the audit grew after the Obama administration withdrew its earlier opposition to the proposal on Thursday, saying it was satisfied that the audit would not interfere with the Fed's authority to set monetary policy.
The consumer protection measure is one of the key features of Obama's package to rein in financial institutions. The overall legislation, the most sweeping rewrite of Wall Street rules since the Great Depression, would also set up a system to watch out for risks in the system, create a method to liquidate large failing firms and write new rules for complex securities blamed for helping precipitate the 2008 crisis.
Democrats have proposed an independent bureau within the Federal Reserve to write and enforce regulations that would police lending. The Republican proposal would create an agency within the Federal Deposit Insurance Corp. The FDIC would have to approve regulations and enforcement would be left to bank regulators.
Republicans said the Democratic bill overreached and would give a powerful consumer agency too big a voice in banking affairs.
The bill would turn the U.S. financial system into "a social justice mechanism" by giving a powerful consumer agency a huge voice in banking affairs, said Sen. Bob Corker, R-Tenn.
Sen. Richard Shelby, R-Ala., said the Democrats go too far by allowing state laws to trump federal laws and he rejected claims that his alternative proposal is too weak.
Dodd, D-Conn., dismissed the Republican plan as "a stimulus package for scam artists."
Associated Press writer Charles Babington contributed to this report.