For the second time in two days, lawmakers voted 57-41 to take up the popular bill, falling short of the 60 needed to move ahead with the toughest regulatory overhaul of its kind since the Great Depression of the 1930s.
President Barack Obama led Democrats in slamming Republicans for blocking legislation backed by nearly two in three Americans, amid smoldering anger at fat-cat financiers blamed for the 2008 global economic meltdown.
“It’s one thing to oppose reform, but opposing even talking about reform in front of the American people and having a legitimate debate, that’s not right. The American people deserve a honest debate on this bill,” he said during a campaign-style visit to Iowa.
“Republicans have made it clear whose side they?re on: Big banks on Wall Street, not middle-class families,” said Democratic Senate Majority Leader Harry Reid, who set the stage for a similar vote on Wednesday.
The vote came as top Goldman Sachs executives faced a barrage of questions and criticism from a key Senate committee over the investment giant’s actions in the run up to the collapse, now the subject of a fraud lawsuit.
Republicans, mindful of a potential political price to pay in November mid-term elections for blocking the bill, said they wanted to give back-room negotiations begun last year more time to forge a compromise bill.
Their lead negotiator, Republican Senator Richard Shelby said his talks with Senate Banking Committee Chairman Chris Dodd, a Democrat, had made “considerable progress” in recent days but still faced high hurdles.
Shelby said “the biggest obstacle” was the creation of an “intrusive” consumer financial protection agency reaching beyond Wall Street to “anybody that’s dealing with finance,” like automobile dealers who offer loans.
“If they will meet us halfway on that, I think we could get a bill,” said Shelby, the top Republican on Dodd’s panel.
It was unclear how long moderate Republicans would hold out as Democrats happily piled on the pressure.
“At this hour, to consider that too radical an idea is stunning to me,” said Dodd, who warned that if Republicans blocked even the start of debate, “they do so, in my view, at their political peril.”
He also said he was prepared to accept an amendment from Democratic Senator Barbara Boxer that he described as saying “no money can be used, no taxpayer money… for any bailouts at all” of big Wall Street banks.
Dodd’s's bill would erect a mechanism for dissolving rather than bailing out financial institutions whose collapse could risk crippling the US economy, so-called “too big to fail” firms.
The legislation — which would need to be merged with the bill the House of Representatives passed in 2009 — would also establish a new agency to protect consumers from abusive lending practices.
The legislation also aims to tighten regulations on the giant market in derivatives — complex, privately traded instruments tied to the underlying value of a commodity and seen as vehicles for dangerous speculation.
Despite the delay in starting debate, no senators were predicting that the popular measure will die.
Democrats and the White House have been eager to portray Republicans as in the pocket of Wall Street, while Republicans say they want tough new rules but that the bill as currently crafted is not ready and must be changed.
“The Democrat majority forced a vote on a bill that wasn’t ready for prime-time,” said Republican Senate Minority Leader Mitch McConnell, who accused Democrats of being “less interested in fixing this bill than in some political win they think they’re scoring by not fixing the bill.”
Democratic Senator Ben Nelson joined Republicans in both votes.