The Obama administration's stepped up demand for tougher restrictions and new taxes on big banks is complicating Senate efforts to write a bipartisan financial regulation overhaul, even drawing a sharp rebuke from a top presidential ally in the Senate.
In an unusual reprimand, Senate Banking Committee Chairman Christopher Dodd, D-Conn., chided administration representatives at the end of a hearing Tuesday for injecting ideas late in his negotiations for a sweeping bill. Dodd complained that the timing of Obama's proposal "seemed to many to be transparently political."
"It's added to the problems of trying to get a bill done," Dodd said. His reproach came at the end of a hearing with former Federal Reserve Chairman Paul Volcker and deputy Treasury Secretary Neal Wolin.
At issue is a proposal, advanced by Volcker, that would prohibit large institutions that conduct commercial banking from engaging in speculative trading. The idea had not been included in the administration's original regulatory plan last June. Judging by the committee's reaction, its chances of getting added to the bill did not improve Tuesday.
The push for the new proposal comes at the most sensitive point in Senate negotiations over sweeping new banking rules -- an Obama priority that has been perceived as the best chance for an administration accomplishment this year.
The administration's stepped-up demand for tougher restrictions coincides with its call for new taxes on big banks to cover any shortfall in the government's highly unpopular $700 billion bank bailout fund.
The combined push has alarmed Wall Street CEOs and intensified lobbying against aspects of the legislation."It's not a movable feast," Dodd said of his committee's work on the bill. "It's not one that I can add ideas to on a weekly basis."
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