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Senate Nears a Showdown on Financial Reform

“If he weakens it too much, there could be a rebellion,” the aide said. “There’s a hope that Dodd realizes how much leverage he has” with Republicans.

Republicans have attacked the inclusion of the $50 billion fund as a pathway to permanent taxpayer bailouts. At their weekly luncheon Tuesday, Democrats discussed whether to eliminate the fund, but some feared they would be playing into Republican hands by validating their argument. Others suggested that getting rid of the fund would give Republicans “nothing to hang their hat on,” the senior Democratic aide said.

Either way, Democrats are not wed to keeping the fund in the bill for the duration of the debate. After all, the White House opposes it as well.

“We’re less concerned about whether there should be a $50 billion fund or another fund or another option,” Sen. Debbie Stabenow (D-Mich.) said. “We’re concerned that there be no taxpayer-funded bailouts.”

Still, Stabenow said Democrats “are not going to weaken this bill to get Republican support.”

Sen. Jeff Merkley (D-Ore.), a Banking panel member, indicated that he does not necessarily need it to be in the bill, but he was dubious of the GOP’s willingness to make a deal that, in his opinion, would insulate taxpayers from future bailouts in the same way the $50 billion fund would.

“There’s a variety of ways to accomplish that objective,” Merkley said. “We hope to work with Republicans who actually care about protecting the taxpayers to find the best way to do it.”

Republicans heard from about 10 of their colleagues during their weekly caucus Tuesday, including Shelby and Sen. Bob Corker (R-Tenn.). The overall message, according to aides familiar with the discussion, was that GOP Senators “are right on the policy” and that the Democratic message that they are sympathetic to Wall Street could easily be debunked by pointing out that Reid, Obama and other prominent Democrats have accepted campaign contributions from the financial sector.

Sen. George LeMieux (R-Fla.), who was scheduled to meet Tuesday with Dodd and Shelby on the issue, said he was against the bill in its current form but would likely be a “yes” vote if changes were made.

“I am a Republican who wants to vote for regulatory reform, but we’ve got to do it on a bipartisan basis,” he said.

Though Corker presented a scathing critique of the Dodd bill to his colleagues Tuesday, he struck a far different tone with reporters, criticizing both parties for ratcheting up their rhetoric on the issue.

“The way this whole debate has been framed is to me very low level and very silly,” Corker told reporters. “And even the things that we’ve been saying on our side of the aisle about bailouts and all that, they miss the point and I think take us off on a bunch of rabbit trails.”

Corker also questioned his leadership’s strategy of seizing on the $50 billion fund as the boogeyman in the bill, saying that should Democratic leaders eliminate that fund, Republicans would have little political cover if Democrats forced a vote.

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