Meanwhile In The Financial Regulation Bill Arena

The Senate today passed a couple of amendments to the Dodd bill making things a hell of a lot tougher on the credit ratings agencies like Moody's and Standard & Poor's.  DDay has the roundup on the Franken Amendment:

The clerk has called the roll on the Franken amendment, which would end the conflict of interest in the rating agency process by creating a new agency in the SEC to assign initial ratings of securities. Earlier, Senate Banking Committee chair Chris Dodd came out against the measure, fearing unintended consequences from it. Defending the “crackdown” on the credit rating agencies in the base bill – which really don’t amount to much, and by Dodd’s own admission don’t get rid of the conflict of interest – Dodd said “I like the idea where it’s (the Franken amendment) going, but I don’t know if it’s sound.” He preferred more study (great, a study, where good intentions go to die) of the problem.

The amendment still has a shot at passage, with members of the Banking Committee like Tim Johnson and Chuck Schumer supporting, as well as at least two Republicans, Roger Wicker and Chuck Grassley. We’ll have to see.

…Carl Levin closed out debate by reading some of the emails gleaned from his Permanent Subcommittee on Investigations about the rating agencies clearly trading triple-A ratings for the promise of more business and more money. Just so you understand which side people are on who vote against this amendment.

…The problem of the rating agencies is precisely what Andrew Cuomo is investigating in New York right now.

The amendment passed 64-35. Good job, Al.  That's the good news.  Here's the bad.

One of the most far-reaching pieces of the Senate's Wall Street reform bill has powerful enemies. The White House doesn't like it. FDIC chief Sheila Bair doesn't like it. Obama adviser Paul Volcker--the patron saint of financial reform--doesn't like it. And neither do a number of key Democrats, including Banking Committee Chairman Chris Dodd. All of them say that a controversial proposal to force financial firms to spin off their derivative-trading desks into separate entities goes too far.

But they may have gotten themselves stuck with it--at least for now. With their assent, the plan was authored by Sen. Blanche Lincoln (D-AR), who designed it to guard her left flank against a somewhat formidable primary challenge, and has been boasting of it on populist grounds for weeks. And that according to Republican and Democratic Senate sources, has led Democrats to quietly agree to postpone any changes they decide to make to her proposal until after this Tuesday's election has passed, to avoid embarrassing her in front of voters.

"I got a pretty good idea that it won't be dealt with before Tuesday," Sen. Bob Corker (R-TN) said last night, in response to a question from TPMDC.

Democrats will hold a special caucus meeting this afternoon, where they could make a final decision on how to proceed.

In other words, the Dems can't kill Lincoln's derivatives legislation until after she wins the primary next week.  Then they can bury the thing for good.  They never had the intention of passing  it, looks like.  But they couldn't kill it without getting rid of Blanche.

What, you thought Miss Senator Wal-Mart was going to really, really limit the massive derivatives market?  I didn't.  A nice bait-and-switch for the voters of Arkansas.  Problem is, Brian Beutler just blew the lid off this one 5 days before the election.

Have fun, Blanche...