Regulating Wall Street still likely in new Senate; White House pushes for consumer agency

Wall Street regulations still doable in new Senate

WASHINGTON — Overhauling Wall Street regulations emerged Wednesday as one Obama administration priority still left standing even though a stunning Republican Senate victory in Massachusetts significantly strengthened the GOP’s bargaining hand.

The White House moved quickly to protect one of the proposed legislation’s key but most endangered features — a new agency to protect consumers in their banking transactions.

“The president is not going to compromise because lobbyists tell somebody that we shouldn’t have an agency that protects consumers,” White House spokesman Robert Gibbs said. “That’s something the president’s not willing to give up.”

The agency is the subject of intense Senate negotiations, and aides and lobbyists said discussions centered on creating a new entity but without all the power sought by the administration. Obama stressed his desire for a consumer agency in a meeting Tuesday with Senate Banking Committee Chairman Christopher Dodd, but the White House did not comment on potential options.

There was also a new urgency in the Senate to move on the legislation — an attempt to respond to the voter anger that propelled Republican Scott Brown to victory in a contest for the seat formerly held by the late Democratic Sen. Edward Kennedy.

Brown’s victory gave Republicans 41 votes in the Senate, enough to mount successful filibusters and prevent Democratic legislation on health care or climate change from getting final votes.

But financial regulations could survive.

“I don’t want to see us have to go through what we’ve been through here where we’ve been relying on one party to get something,” Dodd, D-Conn., said Wednesday.

Moreover, Treasury Secretary Timothy Geithner met with Republican Senate Leader Mitch McConnell of Kentucky on Tuesday. Administration officials now believe that while Republicans may seek to block other aspects of the president’s agenda, McConnell is considering making financial regulations an exception.

To that end, Dodd has been negotiating with the committee’s top Republican, Richard Shelby of Alabama.

“We’re talking, and obviously my hope is that in the next few weeks we’ll have a markup and move forward,” Dodd added, referring to official committee action on the bill.

Senate Democratic and Republican aides have been discussing consumer alternatives, including one that would create a new division within an overarching banking regulator. The entity would have its own budget and would have the power to write new consumer regulations. Enforcement would be left to bank regulators.

White House officials would not say whether such a compromise would be acceptable. And congressional officials cautioned that the plan was still in flux and could still change.