As President Obama and the Democrats exploit the timing of the SEC investigation on Goldman Sachs, rookie Senator Scott Brown (R-MA) declares himself a NO-vote on the financial reform bill. Brown cites his reason as that the bill is not good enough and will go along with a planned Republican filibuster. Senate Minority Leader, Mitch McConnell (R-KY), says that he has all 41 Republicans senators lined up to support the filibuster. Their key argument against the bill, mostly drafted by Chris Dodd, is that it will allow for more bank bailouts in the future. They also contend that the bill does little to curb the crazy derivatives market, and does nothing at all to reform the mortgage industry giants, Fannie Mae and Freddie Mac.

A provision of Dodd’s bill also grants permanent ‘bank status’ of previously non-bank entities such as Goldman Sachs, JP Morgan, GMAC and GE Financial. These firms and others were granted bank status under TARP so they may borrow directly from the Federal Reserve discount window and have other legal protections enjoyed by banks. The provision is often called the “Hotel California Rule”, as it covers such entities which have had this status since January 1st of this year. Some Republicans are also calling for the Wall Street mega-banks to be broken up in order to end the ‘too-big-to-fail’ concept. Odd, you ask? Keep in mind that it was under Nixon that the Justice Department filed anti-trust suits which led AT&T to be broken up, which was finalized in 1984 by the Reagan administration.

The Democrats say they are working to recruit several Republican senators to break ranks. Two names which are popping up are Judd Gregg (R-NH) and Tom Coburn (R-OK). President Obama held a ‘summit’ last week with Congressional leaders from both parties to expedite the passage of financial reform before Memorial Day. Critics from both sides of the aisle are concerned that Dodd’s bill gives too much authority to the Federal Reserve. Senator McConnell, Scott Brown and others are calling for a fresh start to draft a bill that addresses a wider range of issues, including derivatives trading and to get a full audit of the Federal Reserve, plus Fannie Mae and Freddie Mac.