Sens. Carl Levin (D-Mich.) and Jeff Merkley (D-Ore.) — the two top advocates of strengthening the “Volcker rule” throughout the Wall Street reform debate — declared a “victory” Friday after negotiations Thursday led to the incorporation of stricter language into the final bill.
But the news appears to be an even bigger win for Majority Leader Harry Reid (D-Nev.), who faces a difficult challenge holding together the 60 votes needed for the sweeping financial overhaul. Reid needs the votes of Merkley and Levin to help send the bill to the president’s desk, but as late as Thursday afternoon, it was unclear how the Volcker language would be resolved or whether Merkley or Levin would support it.
The two Democrats on Friday praised the conference committee’s adoption of a modified Volcker rule, which is intended to restrict banks from making certain kinds of speculative investments with their own money.
“The inclusion of a ban on proprietary trading is a victory,” the senators wrote in a release. “If implemented effectively, it will significantly reduce systemic risk to our financial system and protect American taxpayers and businesses from Wall Street’s risky bets. This is an important step forward from the current system that has placed few limits on speculative trading by either banks or other financial firms.”
The House and Senate conferees wrapped up their work on a final report just before 6 a.m. Friday morning, but the compromise on the Volcker rule, and the Merkley-Levin additions to the original provisions, marked a huge momentum swing for Democrats. House Majority Leader Steny Hoyer told POLITICO Thursday night that the agreement on Volcker helped pave the way for a late-night deal on derivatives between Sen. Blanche Lincoln (D-Ark.) and moderate House Democrats.
And House Speaker Nancy Pelosi (D-Calif.) touted the bolstered Volcker rule with the Merkley-Levin additions in her weekly meeting with reporters Thursday — citing the measure as a chief reason why the sweeping bill will create significant change. The House was unable to include stronger Volcker language in the version of the legislation it passed in 2009, and Pelosi said its inclusion was a significant step forward.
“It’s pretty exciting because it’s going to be real change,” Pelosi said. “Already taking it to Merkley-Levin or Volcker rule has made giant progress — and part of that is because we passed our bill a while back, the Volcker rule has ripened since then and had much bigger reception as people knew more about it.”
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