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All 41 Senate Republicans Oppose Financial Reform Bill, Say Will Lead To 'Endless Taxpayer Bailouts'

Every member of the Senate Republican Caucus has signed a letter, delivered to Senate Majority Leader Harry Reid, expressing opposition to the Democrats' financial regulatory reform bill, which they all claim will lead to more Wall Street bailouts.

"We are united in our opposition to the partisan legislation reported by the Senate Banking Committee," the letter reads. "As currently constructed, this bill allows for endless taxpayer bailouts of Wall Street and establishes new and unlimited regulatory powers that will stifle small businesses and community banks."

As of last night, 40 of the Senate's 41 Republicans had signed the letter. The lone holdout, Sen. Susan Collins (R-ME), said yesterday that she opposed the legislation but hadn't yet decided whether to sign, and it's not clear what convinced her.

Though the letter is unequivocal about the GOP's opposition to the bill, it does not contain an explicit threat to use the Senate rules to block debate on the bill, if Reid tries to bring it to the floor.

But though the letter does not draw that particular bright line, it markedly stiffens the caucus' position. Minority Leader Mitch McConnell made waves Tuesday by blasting the Dems' proposal, claiming it would institutionalize taxpayer funded bailouts of Wall Street. The assertion was widely disputed by both Democrats and experts, and more than 24 hours later, several Republicans were unwilling to endorse McConnell's take. One of them, Sen. Bob Corker (R-TN), even suggested GOP leadership should tone down its rhetoric and try to reach consensus with Democrats.

Now, it seems, they've all decided to endorse that line.

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Democrats this week seized on parallels between Republican attacks on the financial regulation bill and a 17-page memo drafted in January by Republican wordsmith Frank Luntz designed to give the GOP the language to kill the Obama effort.

Republicans say nonsense, but the echo is there.

“A vote in favor of creating a permanent bailout fund for private companies is like committing hari-kari,” Luntz wrote. “Frankly, the single best way to kill any legislation is to link it to the Big Bank Bailout.”

On Tuesday, Senate Minority Leader Mitch McConnell (R., Ky.) went to the Senate floor to declare, “This bill not only allows for taxpayer-funded bailouts of Wall Street banks, it institutionalizes them.”

In his “Words That Work” advice, Luntz wrote: “If there is one thing we can all agree on, it’s that the bad decisions and harmful policies by Washington bureaucrats that in many ways led to the economic crash that must never be repeated.”

McConnell said: “If there is one thing Americans agree on when it comes to financial reform, it is absolutely certain they agree on this: Never again–never again–should taxpayers be expected to bail out Wall Street from its own mistakes.”

Luntz advised opponents stress the federal government’s role.

McConnell singled out Fannie Mae, Freddie Mac, the Federal Reserve Board, Treasury and the Federal Deposit Insurance Corp. …

Luntz said voter skepticism is based on “the simple belief the government cannot effectively regulate the financial markets at any level.”

McConnell said the Senate legislation “gives the government a backdoor mechanism for propping up failing or failed institutions.”

Such parallels moved Senate Banking Committee Chairman Christopher Dodd (D., Conn.) to enter the Luntz memo into the Congressional Record, a permanent chronicle of Congress, including the financial regulation debate.

“My father would have been proud that has son would have written a document worthy of the congressional record,” Luntz wrote in an email Thursday from Brussels, where his London-bound plane was diverted to avoid volcanic ash from Iceland. “I do think Republican opposition to bigger government and yet another bureaucracy is exactly where America stands right now.”

Don Stewart, a spokesman and speech writer for McConnell, said neither he nor the senator had even heard of the Luntz memo until Dodd’s attack.

“It doesn’t take a genius to realize people don’t like bailouts,” he said.

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Listening to Republican senators mouth scripted lines opposing financial regulatory reforms is to hear them auditioning for jobs as industry lobbyists after Congress.

Their eyes are locked on the next paycheck, not the recovery of the U.S. financial system in the wake of a devastating recession and near collapse of the economy.

The New York Times tallied 70 former members of Congress hired by the financial-services industry, including the former Republican chair of the House Banking Committee.

Senate Republican leader Mitch McConnell of Kentucky leads a chorus suggesting that legislation before the Senate and passed by the House would only invite more bank bailouts in the future. Instead, he insists upon — well, nothing.

McConnell and his colleagues do not offer any suggestions or ideas about how to rein in the most reckless — and lucrative — behavior by commercial and investment banks.

Nor do Republicans offer any leadership in providing American consumers and investors with trustworthy, accessible information about investment products, and their hazards to the treasury. How or why the GOP would oppose such elementary transparency must puzzle voters.

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Wary of impending reforms following the financial crisisr, the financial sector — whose irresponsible behavior was a major factor in causing the global recession — donated heavily to members of both parties during last year’s election cycle. In all, the financial, insurance, and real estate industries (collectively known as “FIRE”) donated $476 million to federal campaigns in 2008, dwarfing nearly every other sector.

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Even as the financial industry has sought to keep a low public profile, some of the country's largest banks have ramped up their spending on lobbying to fight off some of the stiffest regulatory proposals pending in Congress.

Lobbying expenditures jumped 12% from 2008 to $29.8 million last year among the eight banks and private equity firms that spent the most to influence legislation, according to data compiled from disclosure forms filed with Congress.

The biggest spender was JPMorgan Chase & Co., whose lobbying budget rose 12% to $6.2 million, enough for the firm to have more than 30 lobbyists working for it. Among other banks, spending on lobbying rose 27% at Wells Fargo & Co. and 16% at Morgan Stanley.

"I have never seen such a scrum of bank lobbyists as I have in the last year -- and I've worked on quite a few bank issues over the years," said Ed Mierzwinski, a lobbyist for the U.S. Public Interest Research Group, a coalition of state consumer organizations. "It seems like everybody is out of work except for bank lobbyists."

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