Cantwell key in stalled bank-overhaul vote

WASHINGTON — Attempts to pass an overhaul of financial regulations stalled in the Senate on Wednesday as a key procedural vote failed because of near-unanimous Republican opposition and concerns from two Democrats, including Washington's Maria Cantwell, that the legislation was not tough enough on Wall Street.

Senate Democratic leaders failed to get the 60 votes needed to end debate on the legislation and bring the overhaul legislation to a final vote.

Another vote was scheduled for Thursday and key Democrats said they were hopeful they could overcome the procedural hurdle.

Two Republicans voted in favor of the measure, Sens. Olympia Snowe and Susan Collins, both of Maine. Two Democrats, Cantwell and Russell Feingold of Wisconsin, opposed it. Democrats also suffered from the absence of Sen. Arlen Specter, who had not returned from his loss Tuesday in a Pennsylvania primary.

Senate Democratic leaders fell two votes short of ending debate, though the final tally was 57-42. In another indication of optimism they would eventually prevail, Majority Leader Harry Reid of Nevada changed his vote to "no" to make it easier to hold another vote.

Cantwell, in a floor speech after the vote, said she was mainly fighting for a vote on an amendment to tighten proposed rules for the trading of derivatives, the complex instruments that were at the center of the economic crisis.

Her proposal would make it illegal to enter into a derivatives contract that has not been cleared through an exchange, other than contracts specifically exempt from the law. It would also empower regulators and investors to stop or undo a derivatives deal if banks knowingly violated the trading requirements.

Without her amendment, Cantwell said the legislation would be left with a dangerous loophole. "Even something like Hoover Dam with all of the great concrete and all of the great engineering and all the great things that make that structure work, still has a problem if somebody drills a hole in the bottom of it," she said.

"If you don't have a regime of exchange trading and clearing you will have money seeping into the continuation of a dark market," she added.

Cantwell said she would also like a vote on another amendment she proposed, with Sen. John McCain, R-Ariz., that would restore the Glass-Steagall Act, which maintained a firewall between commercial banking and investment banking from the 1930s until it was repealed by Congress in 1999. In a statement, Feingold said he also favored restoring that firewall.

The legislation would create an independent bureau in the Federal Reserve to protect consumers in the financial marketplace, grant the government power to seize and dismantle teetering firms whose failure would pose a danger to the economy, impanel a council of regulators to monitor the financial system for major risks and impose strict regulations on financial derivatives.

Reid and other Democratic supporters of the legislation tried unsuccessfully on the Senate floor to persuade Cantwell to change her vote. But she sat stone-faced and refused their pleas.