As the partisan rhetoric over financial regulatory reform continues to ramp up with Democrats and Republicans openly sparring over who is in the back pockets of Wall Street, all eyes are on Connecticut Democratic Sen. Chris Dodd.
Dodd, chairman of the Banking, Housing and Urban Affairs Committee, is engaged in a tricky balancing act of pushing back against Senate Republicans' charges that his financial reform bill is a bailout for special interests while also trying to woo a handful of moderate Republicans to vote for the legislation.
With the bill expected to come to the floor as early as next week, K Streeters are watching closely to see where they might have an opportunity to get changes in the bill before Dodd brings it up for full Senate debate.
Financial services lobbyists are heavily lobbying moderate Democrats and Republicans on the Banking panel to have them push for changes on derivatives and "too big to fail" provisions.
Several companies that use the over-the-counter derivatives market to hedge financial risk were pushing for legislation that Agriculture, Nutrition and Forestry Chairman Blanche Lincoln (D-Ark.) had been working on in coordination with ranking member Saxby Chambliss (R-Ga.). However, after that deal was sunk following White House intervention, the product Lincoln unveiled last week tacks farther left — and is harder on banks — than the industry expected.
Those companies and others looking for changes are now targeting Republican Sens. George Voinovich (Ohio) and Susan Collins and Olympia Snowe of Maine, along with Democratic Sens. Mark Warner (Va.) and Evan Bayh (Ind.), according to K Streeters.
But getting major alterations to the bill now is unlikely. Both Banking ranking member Richard Shelby (R-Ala.) and Sen. Bob Corker (R-Tenn.), an early advocate of bipartisan compromise on the legislation, have seen their leverage diminished with Dodd more seriously considering moving forward without a bipartisan deal.
"I think that in essence the politics have overshadowed the substance now," said Scott Talbott of the Financial Services Roundtable. "Every bill has to blow up a couple of times. It's the natural cycle."
Despite saying Republicans are testing his patience, Dodd has continued to leave the door open for a bipartisan compromise, conferring frequently with Shelby despite the partisan rhetoric. So has Corker, who as late as last week was making positive comments about reaching a bipartisan deal.
"It's a game of political chicken," one financial services lobbyist said. "The opportunity for a bipartisan bill exists until final passage."
Dodd's commitment to bipartisanship is also a nod to his legacy, according to several K Streeters. Bringing the bill to the floor without a bipartisan deal could be a risky strategy if moderate Republicans don't break with their leadership. With his impending retirement, Dodd is trying to make the most dramatic changes to the financial sector in more than 30 years.
Still, a deal could inflame the left.
It's not just Wall Street that is looking for changes in the bill. Activists, public interest groups and government watchdogs are also closely reviewing what changes are made to Dodd's bill.
Heather Booth of Americans for Financial Reform said the group is looking for the bill to hold the big banks accountable, protect consumers and make sure there are no more taxpayer-funded bailouts.
"We want to ensure that consumer protection is really independent and not under the regulators who are looking out for the profitability of the biggest banks," Booth said.