This vote was on whether to begin debate on a bill that aims to close gaps in financial regulations, strengthen oversight of consumer lending and more closely oversee financial derivatives. Derivatives are, in essence, very complex financial contracts that businesses use as a hedge against large changes in the price of some commodities such as gasoline, but that have also become popular with speculators looking to gamble on big profits. Speculation in derivatives, relatively unhampered by regulation, is often blamed for partially contributing to the financial meltdown in 2008.
Typically bills are brought to the floor of the Senate through a procedural motion called a “motion to proceed,” which is usually approved by voice vote as a routine matter. However, if a senator wants to hold up consideration, all he or she has to do is remove consent – which was the case with this bill. Instead, the Democratic leadership called a vote on beginning debate on the bill. This was necessary because Republicans had threatened to hold up the bill’s consideration indefinitely with a filibuster, causing Senate Majority Harry Reid, D-Nev., to file what is known as a “cloture motion,” which, in essence, is a vote on bringing debate on a bill or amendment to a close, which is what this vote was on.
If the Senate votes to “invoke cloture” – or bring debate to a close – then lawmakers must either hold a vote on the legislation, amendment or motion in question, or move on to other business. This type of motion is most often called on contentious legislation where the leadership is concerned that consideration could be held up indefinitely by a handful of senators.
President Obama has made this Wall Street overhaul one of his top priorities. Democrats say the bill would help prevent the kinds of activities that contributed to the 2008 financial collapse, but Republicans argue that in fact the bill would just open the door to more financial malfeasance.
“Today my plea is not so much on the substance of what is here, although I am willing to discuss all of that because it is important our colleagues know what we have tried to achieve and accommodate in our legislation, but a plea to let us get to the debate,” said Chris Dodd, D-Conn. “So I urge my colleagues—I urge them—to let us get to this debate. Let us do our best to resolve these matters as adults, as people who have strong views and feelings, many of which we agree on, by the way. I mentioned my colleague from Virginia, the Presiding Officer. I don’t know how long Mark Warner and Bob Corker spent—hundreds and hundreds and hundreds of hours—to make sure that in this proposal never again would a financial institution in the United States of America reach such a status that it would be guaranteed implicitly that the Federal Government would bail them out when they engaged in excessive risk and put themselves in great jeopardy. Our bill does that. Without any question whatsoever, those entities, if they reach that point, will fail. They will go into bankruptcy, they will go into receivership, and management gets fired. They don’t get a bonus, they get fired. Shareholders lose their resources or their investments, as well as do creditors, not to mention other problems associated with it. But the idea is, those entities go out of business, and we wind them down in a way that doesn’t jeopardize other sectors of our economy.”
Judd Gregg, R-N.H., said in fact the bill would damage the economy.
“It is incomprehensible that a nation which has become as strong and as vibrant as we have by promoting a market economy would decide to go down this route, which is the antipathy [sic] of a market economy, but that is where we are. That is what has happened here, and that is the direction we are going. It is unnecessary, by the way, as I said earlier; unnecessary, because derivatives can be made safer and sounder by simply restructuring the transparency and the manner in which they are put on clearinghouses, limiting the amount of those that are subject to exemption, and pushing people toward exchanges, to the fullest extent possible and to the extent it will work. All that can be done without this type of language which is so destructive and, as the Fed has said, will have the exact opposite effect of what it is alleged to be doing,” Gregg said.
By a vote of 57-41, the Senate rejected the motion to begin debating the bill. Though more voted yes than no, this particular type of vote required 60 votes in order to be considered approved. All but two Democrats present voted to open debate (including Harry Reid, who changed his vote to no at the last minute in order to preserve his right to call the measure back for a revote at a later time). Every Republican present voted against opening debate. The end result is that the Senate rejected the motion to begin debating a bill that would overhaul the financial system.