Author: Annie Lowrey

Today, at 2 p.m., the Senate will vote on Sen. Harry Reid’s (D-Nev.) motion to invoke cloture on Sen. Chris Dodd’s (D-Conn.) financial regulatory reform bill. The 60-vote-hurdle cloture motion, if it passes, would end debate on the bill and in 30 hours — after 8 p.m. on Thursday — the Senate could take a final 50-vote-hurdle vote on the measure. Right now, it seems that Reid does not have 60 votes, and therefore debate will continue and he will have to file for cloture again.

The Senate is no longer taking any new amendments to the Dodd bill, but is allowing secondary amendments tacked on to other amendments. At the literal third-to-last minute yesterday, Dodd amended Sen. Blanche Lincoln’s (D-Ark.) controversial derivatives language, which would have forced banks to spin off their derivatives trading desks into separately financed entities. Brady Dennis at The Washington Post offers a good explanation of the derivatives compromise language and the trouble it has caused in the last 24 hours:

Dodd offered a clever Washington solution aimed to appease both friends and foes of the provision. His amendment preserves the tough language — but it postpones any action for two years so it can be studied. And it assigns that study to a new council of regulators, headed by Treasury Secretary Timothy F. Geithner, whose members have serious reservations about such a dramatic measure and may very well kill it in the end.

Voila. Language saved, action averted. Move on.

Problem is, the idea didn’t sit so well with Sen. Blanche Lincoln (D-Ark.), chief advocate of the derivatives ban, who was in Arkansas on Tuesday fighting for her Senate seat in a primary election. (Her bid to secure the nomination fell short, setting up a June 8 runoff election.) When contacted about Dodd’s proposal, staff members seemed unaware of it. They later sent out a statement on Lincoln’s behalf. “I remain fully committed to my provision and will fight efforts to weaken it,” she said. “I’m proud of the support my provision has received both inside and outside the Senate and will defend it should there be a debate on the Senate floor.”

Nor did the banks cheer Dodd’s compromise. “It’s immediately going to have a chilling effect,” said one banking lobbyist, who spoke on the condition of anonymity to speak more freely. “Markets crave certainty. All this does is introduce a comic amount of uncertainty.”

But if the compromise brings Republicans over to vote for the bill, it will stay. Notably, the Dodd bill punts on a number of issues — including, for instance, the Volcker Rule banning proprietary trading at federally insured banks.

Here are the remaining amendments to the Dodd bill. Not all will receive a vote:

• Sen. Sam Brownback’s (R-Kans.) amendment to exclude automakers from from the authority of the Consumer Financial Protection Agency.
• Sens. Olympia Snowe (R-Maine) and Mark Pryor’s (D-Ark.) amendment on small business fairness, which might exempt small businesses from CFPA rules.
• Sen. Arlen Specter’s (D-Pa.) amendment of section 20 of the Securities and Exchange Act, allowing private civil action against people that violate certain SEC laws.
• Sen. Patrick Leahy’s (D-Vt.) amendment to restore the application of federal antitrust laws to health insurers.
• Sen. Sheldon Whitehouse’s (D-R.I.) amendment to give states stronger authority to protect consumers from usurious lenders.
• Sens. Maria Cantwell (D-Wash.) and John McCain’s (R-Ariz.) amendment to limit affiliations with certain member banks.
• Sens. Ben Cardin (D-Md.) and Richard Lugar’s (R-Ind.) amendment to require the disclosure of payments by resource extraction issuers.
• Sen. Richard Shelby’s (R-Ala.) amendment to make the Consumer Financial Protection Agency funded by Congress, rather than the Federal Reserve.
• Sen. David Vitter’s (R-La.) amendment exempting manufacturers and entrepreneurs from some regulations.

• Sen. Judd Gregg’s (R-N.H.) amendment to prohibit taxpayer bailouts of fiscally irresponsible state and local governments was withdrawn.
• Sen. Bob Corker’s (R-Tenn.) amendment on the applicability of state laws to national banks failed, 43-55.
• Sen. Tom Carper’s (D-Del.) amendment on the applicability of state laws to national banks passed, 80-18.
• Sen. Byron Dorgan’s (D-N.D.) secondary amendment to ban naked credit default swaps was tabled, 57-38.

Fed governors and market gurus have been warning about the threat of inflation to the United States economy — but there remains no sign of prices rising at worrying rates. Indeed, this morning, the Bureau of Labor Statistics reported a slight deflation in the price of consumer goods in April — a decline of 0.1 percent. Over the past year, the Consumer Price Index has increased 2.2 percent.

The single-month downturn does not signal that the United States is in for a troubling period of deflation. It is due to a drop in energy commodity prices, particularly a 2.4 percent decline in the cost of gasoline. Most other prices, for things like food and cars, drifted slightly upward. Core CPI — a better measure of underlying inflation — did not budge in April. Year-over-year, it is 0.9 percent, the lowest rate since 1966.

Were the CPI to show stronger growth, indicating increasing inflation, it would put pressure on the Federal Reserve to raise short-term interest rates.

Showdown on K Street protesters in New York on Sunday (showdowninamerica.org)

On Monday, with Sen. Harry Reid (D-Nev.) promising a final vote on financial regulatory reform in the next few days, rather than weeks, thousands descended on K Street in Washington, D.C., to lobby the lobbyists.

Image by: Matt Mahurin

The union giants SEIU and AFL-CIO as well as community organizing umbrella group National People’s Action held a “Showdown on K Street,” bringing around two thousand workers and organizers to protest against big Wall Street banks, the lobbyists they have hired to attempt to water down the Senate bill and continued economic strife more generally. Indeed, the event ended up more of an expression of sustained populist anger at the sour economy and banks’ $1.4 million-a-day lobbying effort than a protest against specific practices or provisions in the bill.

It started on Sunday when more than a hundred activists protested on the front lawns of two executives: Bank of America’s Gregory Baer, the company’s counsel for regulatory policy, and Peter Scher, J.P. Morgan Chase’s executive for government relations. At Baer’s home, NPA noted that Bank of America — after requiring a $45 billion taxpayer bailout — has spent $16 million lobbying against Sen. Chris Dodd’s (D-Conn.) regulatory reform bill.

Adolfo Abreu, an organizer for NPA who came down for the events from his home in the Bronx, noted that Baer came home while organizers were occupying his front doorstep, with one woman describing how Bank of America continued to attempt to collect payment from her on a phone call 30 minutes after she learned of the death of her son. Abreu said that Baer “started yelling at us, like, ‘Get out of here!’”

“These banks are way too involved in the economy, and they have been way too involved in protesting this bill,” Abreu said. “We are focusing on people, not people with privilege. We need these rights.”

At 11 a.m. on Monday morning, dozens held a vocal protest outside of the downtown offices of the Podesta Group, the powerful Democratic lobbying shop headed by Tony Podesta, who worked in the Clinton administration and has earned the left’s ire for lobbying against Democratic priorities. Protesters shouted, “Tony Podesta is hurting America!”

And at noon, the protest started in full, with approximately 2,000 gathering in McPherson Square. They held bright hand-painted signs and shut down traffic, as they did when protesting on Wall Street itself last week. Joel Hershey, a middle-school science teacher in Syracuse, N.Y., took to the microphone to fire the crowd up. He said he had taught for four years, and three weeks ago heard that he “would not be going back to school” — one victim of municipal layoffs due to budget cutting. He noted that his wife and he are “just two of the 300,000 teachers that could lose their jobs in the next year….devastating news for America’s children.”

The crowd then marched to and occupied the busy intersection at 14th and K Streets — “lobbyist central,” as one SEIU volunteer put it. The protesters, soaked by pouring rain at that point, had set up a 20-foot-tall paper-and-wood pulling the marionette strings of Congress and passed around whistles and drums.

Al Marshall of Oakland, Calif., took to the loudspeaker as the protesters engaged in a “sit in.” (The actual sitting part did not happen, with the pavement soaked.) With tears rolling down his cheeks, the construction inspector explained that he had purchased a “fixer-upper” but that he and his wife had struggled to make payments to Wells Fargo after she lost her job. The bank reclaimed the home as a foreclosure after “laughing” at him when he asked for a loan modification. “There shouldn’t be a homeless person anywhere in America,” Marshall said.

Ed Whalen, a member of the Sheet Metal Workers’ International Association Local 100 in Baltimore, affiliated with the AFL-CIO said he was there to protest such “financial anarchy.”

“The downturn has affected everybody, but it has proportionately affected the construction industry and my line of work because every part of the business relies on financing,” Whalen said. “There’s no getting around it. I’m at a loss for words to described what’s wrong here.”

Later on, the protest split up with smaller groups visiting the Hill and even interrupting goings-on at local bank branches. SEIU protesters, for instance, flooded a Bank of America branch on Capitol Hill, shouting “Bank of America — Bad for America!”

Another group of 100 protesters — many part of the Alliance to Develop Power, a Massachusetts group — showed up unannounced at the Russell Senate Office Building offices of Sen. Scott Brown (R-Mass.). The protesters complained that Brown had campaigned against the Troubled Asset Relief Program and contended that he now “does big banks’ bidding in the Senate.” The protesters brought a “big tent” into the cramped space (and then asked staffers “Who’s in your big tent!”) and eventually convinced office members to arrange a meeting between the senator and protesters.

Today, President Barack Obama and Vice President Joe Biden released their financial disclosure forms from 2009. In them, you can learn that Obama made $1 million in royalties from each of his books, and donated his Nobel Peace Prize winnings. But the most interesting point? Bo the Portuguese Water Dog, a gift to the Obamas from the late Sen. Ted Kennedy, is worth $1600.

The amendment-athon on Sen. Chris Dodd’s (D-Conn.) financial regulatory reform bill is coming to a close, with staffers saying only five or so more amendments will receive votes. Senate Majority Leader Harry Reid (D-Nev.) has indicated that he plans to file cloture on the bill — ending debate and leading to an up-or-down vote on the measure — tonight.

But he probably does not have the 60 votes to end debate this go-around. Sen. Byron Dorgan (N.D.), a Democrat, has indicated that he might not vote with Reid, who needs all Democrats to stick together to move forward.

The Senate just agreed to Sen. Jay Rockefeller’s (D-W.V.) amendment preserving certain regulatory authority for the Federal Trade Commission, passing the measure by voice vote. Starting at 5:30 tonight, the Senate will vote on Sen. Mike Crapo’s (R-Idaho) amendment modifying credit-risk requirements for mortgage assets; Sen. John Cornyn’s (R-Texas) amendment changing some procedures regarding the International Monetary Fund; and Sen. Mark Udall’s (D-Colo.) amendment increasing ease of access to credit scores.

Today, the Treasury and Housing and Urban Development Departments released April data on the Home Affordable Modification Program, the Obama administration’s effort to modify mortgages in order to stem the tide of foreclosures and keep families in their homes. Modifications increased 13 percent month-to-month, to 300,000.

“As the number of homeowners receiving permanent modifications continues to increase, the administration’s comprehensive efforts are making an impact in the housing market’s overall recovery,” the Federal Housing Administration’s commissioner, David Stevens, said in a statement. “Today, mortgage rates remain at historic lows, around five percent; foreclosure starts are down 27 percent from last year this time; and home prices and the pace of home sales have stabilized in recent months.”

Still, the housing market remains weak and HAMP remains far short of its goal to aid 3 or 4 million homeowners by 2012. As of April, HAMP had started 1.2 million modifications, but the program had dropped more than 280,000 homeowners — a surprisingly high rate. And many of the mortgage holders aided by HAMP remain far underwater on their mortgages, and thus more likely to walk away from their homes.

Back in 2006, the Pension Protection Act instituted a new requirement: that all non-profits need to file a 990-N annual return with the Internal Revenue Service in order to retain their tax-exempt status. Before then, non-profits with annual revenues less than $25,000 did not need to file papers.

Small, non-religious non-profits that have not filed a tax exemption since 2007 lose their status today. And the Urban Institute estimates there might be up to 365,000 of them. Those organizations will need to file papers, pay a fine and possibly pay back taxes. The Urban Institute has created an online map where people can input their zip codes to see charities in their neighborhoods that might be impacted. (There were more than 100 in my neighborhood alone.) The think tank and other groups, such as National Council of Nonprofits, are urging non-profits to file today. The IRS has indicated it might provide some lenience, but expects non-profits to comply with the new law.

All that hand-wringing over California being the next Greece might not be for nothing. States are starting to report their April tax collections, and several have announced numbers far lower than expected even a few weeks ago, auguring bigger deficits and budget shortfalls for next year. The Wall Street Journal reports that collections are down 26 percent in California, 12 percent in Pennsylvania and 10 percent in Kansas. States are starting to look to the federal government — itself under pressure to reduce deficit spending — to make up the shortfall:

Kansas lawmakers are hoping the federal government will help. After the state’s April revenue missed estimates set just two weeks earlier, the legislature responded by changing the state budget to assume Congress will extend more federal support for Medicaid through the end of the year.

Increased federal spending on Medicaid…was a major component of last year’s stimulus package, and it has helped many states prop up their budgets. But it is uncertain that Congress will approve more such funding.

In some states, governors are responding to the April shortfalls on their own. Missouri’s April tax revenue decreased $13.2 million, or 3.6 percent, from the same month a year ago. State budget director Linda Luebbering ordered agencies to hold back $45 million in appropriated spending because tax collections were so far below projections.

Other states have already taken drastic measures to close budget shortfalls. For instance, in March, Arizona decided to end its state health insurance program for children, eliminating free coverage for 47,000 kids. California might end its welfare-to-work program as well as a number of child-care initiatives. And South Carolina has closed group homes for children and a program to help youths emerging from prison sentences to get jobs.

Damian Paletta at The Wall Street Journal reports that Senate Majority Leader Harry Reid (D-Nev.) is “likely” to file cloture on Sen. Chris Dodd’s (D-Conn.) financial regulatory reform bill today. That means the Senate could vote on the bill as soon as Wednesday.

I think this assessment is slightly rosy, though the final vote should come soon. If Reid files for cloture today, my guess is that he might not have 60 votes to end debate, as too many amendments are pending and too many senators have pet issues they want to see resolved. Additionally, if Reid files for cloture and the motion does pass, the Senate can debate the bill for only 30 hours more and no new amendments can be filed. That means no new compromise amendments on issues such as the Volcker rule, possibly meaning Reid might delay for another day or two.

A number of major amendments remain pending and should come up for a vote today or tomorrow. Sens. Maria Cantwell (D-Wash.) and John McCain (R-Ariz.) expect a vote on their amendment reinstating parts of the Depression-era Glass-Steagall Act, a law rescinded in 1999 that barred financial firms from offering commercial and investment banking under the same roof. (If passed, Cantwell and McCain’s amendment would require banks like J.P. Morgan Chase to break up.)

Sen. Sam Brownback (R-Kans.) expects a vote on his contentious amendment barring the Consumer Financial Protection Agency from enforcing rules against auto dealers. And Sens. Jeff Merkley (D-Ore.) and Carl Levin (D-Mich.) have an important amendment to ban proprietary trading at federally insured banks.

A few weeks ago, Citigroup and the real-estate investment firm Redwood Trust announced they had organized the sale of new mortgage-backed securities. They reported that they had picked 255 high-quality jumbo mortgages — mortgages too big to be backstopped by Fannie Mae and Freddie Mac — issued by Citigroup in California to back the financial instruments. Every borrower put down more than 20 percent in cash, and the average remaining balance on each loan was $933,000 — these borrowers, Redwood said, were rich and cash-rich. Redwood pegged the value of the Sequoia Mortgage Trust at $222.4 million and prepared to bring it to market.

But this is the first private issuance of mortgage-backed securities in more than two years — and it has sparked a market frenzy. Redwood Trust’s Brett Nicholas proclaimed, “This transaction has broken the ice in the private mortgage securitization market, which has been essentially frozen since 2008.” Investor demand was high enough that Redwood Trust cut its yield. And citing a turnaround in the private mortgage securities market, Wells Fargo said it is rebuilding its housing finance team.

Gearing up for the market reawakening, Redwood hired Moody’s to rate the securities — expecting a AAA rating, meaning no more of a likelihood of default than the U.S. government. Moody’s delivered. But then, its chief rival in the credit ratings business, Standard & Poors, without having been hired to assess the Redwood mortgage-backed deal, decided it had something to say. On Wednesday, it released a note saying that it did not believe the Redwood residential mortgage-backed securities met its AAA standards. These “jumbo” loans were riskier, it said. Some of the loans have periods where the mortgage-holder only pays the interest rate, and some become adjustable-rate after five years. “If mortgage rates rise, property values remain flat, and the extension of credit is limited, we believe borrowers may face difficulties refinancing,” S&P said.

But the point of this post is not to question whether the Redwood deal is good or not, or whether the unfreezing of the private mortgage-backed securities market is good or not, or whether anyone should care about this deal or not. It is to point out the inanity of the credit ratings business. These Redwood securities have received more scrutiny than any other mortgage deal in recent memory. Investors and the press have poured over them with a fine-tooth comb. They have ginned up hundreds of inches of newspaper space, and hundreds of blog posts and a number of research reports. Presumably, the financial sophisticates buying up the Redwood securities pool have done extensive homework on everything from the risks of these precise Californian jumbo mortgages to the possibility of housing finance bills changing the marketplace down the line.

Nobody really needed the credit ratings agencies to analyze this deal, per se. But the credit ratings agencies did analyze it and… came up with different conclusions. It is as good an argument as any for ignoring the ratings and doing one’s own due diligence. And I wonder, since the financial regulatory reform bill does little to reform the way credit ratings work, whether that might become more common — for sophisticated investors to not care about (and therefore not demand) ratings on smaller and highly transparent financial instruments.

The big macroeconomic news today is that the United States’ GDP grew at a 3.2 percent per year pace in the first quarter — the third straight quarter of strong growth, weaker than the 5.6 percent pace in the fourth quarter of 2009 and right in line with  economists’ expectations.

The Bureau of Economic Analysis cites growth in personal consumption (that is, consumer spending), private inventory investment (stores restocking their shelves), exports and nonresidential fixed investment (business purchases of things like wells, hotels, computer systems and plumbing) as the major factors accounting for the growth. Consumer spending increased at a 3.6 percent pace, the strongest in more than three years.

Of course, GDP is just one number among many. But its pace of growth slowing is a sign of how strong the headwinds remain as the government withdraws its crisis programs and unemployment remains high (a lag on GDP growth, because all those unemployed people are not producing much, nor are they consuming much). The stronger the growth, the faster the United States fills its output gap.

Today, April 30, is the last day for the Obama administration’s tax-credit programs for homebuyers. Purchasers need to have signed a binding agreement by the end of the day and have closed on the home by June 30 in order to receive the credits — $8,000 if it is their first home and $6,500 if they are trading up. Reportedly, the sunset of the valuable credit has caused realtors and homebuyers to “go nuts“: many realtors are staying open until midnight, partially vacant housing units are hosting lush open houses and properties are being snatched up in bidding wars.

The question is the extent to which the tax credits are the life in the market. By Feb. 20, $1.8 million people had claimed the credit at a cost of $12.6 billion, the Treasury Department said, but many of those buyers would have purchased a home anyway. But anecdotally, at least, the tax credits have been driving the market over the past 60 days, as it became clear that Congress would not renew the costly program. (“I think that’s pretty much it,” Sen. Chris Dodd (D-Conn.) said.)

And everyone is holding their breath for a crash — or, really, silence — come Saturday morning. The fundamentals are just not good. Unemployment is high. Foreclosures are peaking. Unemployment benefits for more than a million people might expire, pushing foreclosures even higher. The Obama administration’s housing programs have been broadly ineffective. The amount of shadow inventory is extraordinary. And the amount of governmental intervention was massive.  In many parts of the country, the market seems to have stabilized. In others, the downward pressures seem too great.

Sen. Barbara Boxer (D-Calif.) will likely offer the first amendment to Sen. Chris Dodd’s financial regulatory reform bill which is now on the floor and in the process of being merged with Sen. Blanche Lincoln’s (D-Ark.) derivatives language. It will be a symbolic amendment, and a bipartisan favorite: No taxpayer funds for Wall Street bailouts. According to Talking Points Memo, Dodd says the real work on voting amendments into the bill will start on Tuesday.

Economist and President of the Federal Reserve Bank of San Francisco Janet Yellen, whom President Obama nominated to become vice chairperson of the Federal Reserve board this morning, has responded to today’s events on her bank’s website:

I’m honored that President Obama has asked me to serve in that capacity. If confirmed by the Senate, I am looking forward to working even more closely with Chairman Bernanke and the other governors, and continuing to collaborate with my colleagues throughout the Federal Reserve System to conduct policies that foster economic prosperity and ensure a stable financial system.

I am strongly committed to pursuing the dual goals that Congress has assigned us: maximum employment and price stability and, if confirmed, I will work to ensure that policy promotes job creation and keeps inflation in check.

Not to read into the statement too much, but it is interesting that Yellen names the mandate of “maximum employment” first and that she mentions jobs twice.

I don’t watch much television, and therefore have missed most of the attack ads on financial regulatory reform. But, with Sen. Chris Dodd’s (D-Conn.) bill finally on the Senate floor for formal debate — and the open amendment process starting today — the back-and-forth will only heat up. When Sen. Jim DeMint (R-S.C.) tweeted “Let’s stop ‘too big to fail’” with a link to an ad this morning, I thought I would check it out.

Compelling. But let’s fact check, line by line.

When our economy crashed, small investors were left behind. Congress bailed out the Wall Street banks that caused the collapse with your money.

So far, so good. When the economy crashed, the government did prop up the Wall Street banks with cash infusions and bailouts via Congress and the Federal Reserve. By “small investors,” I presume the ad means “small businesses,” which certainly have not benefited much from Washington’s efforts. Either way, yes, the little guy was on the hook for the big fishes’ losses.

Now Congress is considering so-called “financial reform” that gives the government unlimited executive bailout authority – unlimited bailouts for big banks, paid for by you and me.

I’m not sure what “unlimited executive bailout authority” means — though it is a nice, menacing turn of phrase. Dodd’s bill does not at all provide the executive branch with the authority to bail out firms willy-nilly; the whole point of the bill is to prevent the government from having to rescue the financial sector again by forcibly shutting down and breaking up dangerous firms, and creating a slew of provisions to stop them from becoming dangerous in the first place.

The Republican counterproposal does precisely the same thing — but actually puts taxpayers on the hook first. The Dodd bill forces banks to create a $50 billion fund for the government to use in the process of “resolving” — that is, liquidating — a failing or dangerous firm. The Republican proposal makes the government liquidate the firm first and then recoup any losses.

Who supports this phony reform? The big banks. The CEO of Goldman Sachs, a bank under investigation, says, quote, “The biggest beneficiary of reform is Wall Street itself.” And after receiving billions in taxpayer bailouts, Citigroup’s CEO says, quote, “You can count on Citigroup to support these efforts.”

No, financial firms do not support the reform bill. Provisions such as the ban on proprietary trading and regulation of derivatives will make their businesses less lucrative. Thus, they have spent millions of dollars lobbying against the bill.

And of course Wall Street does not announce its opposition to reform. It would hardly be politic to argue, “We would like to remain unregulated and capable of taking risks that might destroy the world economy but will certainly enrich us,” in Congressional testimony.

When big banks line up to support phony reform, it’s like, well, you know…

Accompanying this text is footage of oinking pigs. I guess that this implies pork, or greed, or something. I really have no idea.

And there’s the ad, as brought to you by Consumers for Competitive Choice, an astroturf lobbying firm. For more on them, see TPM’s excellent reporting here.

This morning, President Obama named three people to the board of the Federal Reserve: Janet Yellen to be vice chairman, and Peter Diamond and Sarah Bloom Raskin to be general members of the seven-person board.

Yellen is the president of the Federal Reserve Bank of San Francisco, Diamond is an economist at the Massachusetts Institute of Technology and Raskin is Maryland’s state banks regulator. The nominations were first floated in March. All three picks are widely respected in economic circles, particularly among liberals.

Yellen is known as an inflation dove — a believer that the risk of inflation remains low and therefore the Federal Reserve should maintain interest rates at scratch to help the economy grow. She also tends to have more employment-centric views than other Fed economists. For instance, earlier this month, she said, “Even as we applaud the economic turnaround, it’s important not to lose sight of just how fragile this recovery is and how far we yet have to go before things return to normal.” Diamond is a highly respected liberal academic economist. And Raskin is known as a strong banking regulator, taking a hard line against mortgage fraud, for instance.

But why did Obama pick Raskin rather than another economist? And if the Federal Open Markets Committee sets the interest rate, what does the Fed board do?

The board is meant to contain a “fair representation of the financial, agricultural, industrial, and commercial interests and geographical divisions of the country,” hence the pick of Raskin from the regulatory, rather than academic, economic world. It does not move the interest rate, true, but the board helps to coordinate the Fed’s monetary policy, supervise banks, aid the credit markets, keep a general eye on the economy, coordinate the 12 regional banks, conduct research, maintain financial stability and oversee systemic risk.

Rather than taking a fourth cloture vote, the Senate just agreed to start formal debate on Sen. Chris Dodd’s (D-Conn.) financial regulatory reform bill by unanimous consent.

Earlier this afternoon, Senate Minority Leader Mitch McConnell (R-Ky.) said Republicans would no longer stand in opposition to the bill reaching the floor. Republicans Olympia Snowe (Maine), Susan Collins (Maine) and Lamar Alexander (Tenn.) indicated they would vote for the cloture motion. But Senate Majority Leader Harry Reid (D-Nev.) just asked for unanimous consent — a parliamentary procedure that does not require a vote, as long as no senator objects.

Senators are currently speaking and anyone interested can watch all of the hot Hill action here.

Senate Minority Leader Mitch McConnell (Ky.) has distributed a press release stating, if circuitously, that Republicans will agree to start formal debate on Sen. Chris Dodd’s (D-Conn.) financial regulatory reform proposal:

I appreciate the efforts of Sen. Shelby to work toward a bipartisan solution on an issue that will have an impact on nearly every American. The time afforded by my Republican colleagues and Sen. Ben Nelson was instrumental in gaining assurances from the Chairman that changes will be made to end taxpayer bailouts and the dangerous notion that certain financial institutions are too big to fail.

Unfortunately, Sen. Shelby believes that continued talks on a number of provisions affecting Main Street will not bring the negotiators any closer to an agreement. Now that those bipartisan negotiations have ended, it is my hope that the majority’s avowed interest in improving this legislation on the Senate floor is genuine and the partisan gamesmanship is over. I remain deeply troubled by a number of provisions in this bill and will work aggressively in the days ahead to ensure that the majority does not use our mutual interest in regulating Wall Street to extend the federal government’s unwanted hand into Main Street.

That means that Senate Democrats will not need to force an all-night filibuster, as they threatened to do earlier today.

It does not mean that Republicans agree to the bill, of course. The GOP is working on changing the resolution authority provisions before formal debate starts. And once on the floor, the bill will go through numerous, and possibly substantive, amendments proposed by both Republicans and Democrats. For a guide to those changes, see TWI’s roundup here.

Matt Corley at ThinkProgress picks up on a bizarre statement from Sen. Bob Corker (R-Tenn.) on financial regulatory reform. On CNBC this morning, Corker admitted that he is “not sure what the purpose of” the Republican alternative plan for financial regulatory reform is.

If written well and carefully considered, the Republican bill might have helped to define the parameters of reform, with the ultimate bill presumably falling between it and Sen. Chris Dodd’s (D-Conn.) bill. But the Republican alternative reform proposal just adopts the Dodd bill’s architecture. The two are so close, and with differences either so trivial or so glaring, as to give little insight into the concessions Democrats are in the final stages of making.

This afternoon, the Federal Open Markets Committee, the board of the Federal Reserve that determines monetary policy and interest rates, announced it has decided to keep the target federal funds rate between 0.0 and 0.25 percent, as expected.

The language in the statement was virtually identical to that in last month’s, indicating no change in Fed policy. All of the FOMC members voted to keep rates the same, save for Federal Reserve Bank of Kansas City President Thomas Hoenig, a vocal inflation hawk who has voted for rate increases at the past two meetings. The minutes say Hoenig believes that keeping interest rates low for “an extended period” is “no longer warranted because it could lead to a build-up of future imbalances and increase risks to longer run macroeconomic and financial stability.”