Senate Close to Deal on Financial Reform

By David Espo & Jim Kuhnhenn, Associated Press Writers

WASHINGTON (AP) β€” In a concession, Senate Democrats agreed Tuesday to jettison a $50 billion fund that Republicans attacked repeatedly as a perpetual Wall Street bailout-in-waiting, according to officials in both parties, clearing one of the key obstacles to approval of tougher federal controls over the financial industry.

While a formal announcement was held up pending a review by key lawmakers and the Obama administration, the emerging agreement was designed to assure that any future taxpayer costs arising from the liquidation of big firms in the future would be temporary and on a case-by-case basis.

The agreement marked a retreat by Democrats, who had protested bitterly in recent days that Republicans were inaccurate with claims that the multi-billion-dollar fund would serve as a source for future bailouts.

President Barack Obama has made an election-year priority of congressional passage of legislation to prevent future economic calamaties like the one that plunged the country into a deep recession 18 months ago. Opinion polls suggest strong support for additional federal regulations, even though numerous surveys also report high levels of public distrust of government's abilities to solve problems.

Obama, speaking to a business organization, said there would be "legitimate differences on the details of what is a complicated piece of legislation" in the coming days.

At the same time, he said, "We cannot allow these reforms to be watered down. And for those of you in the financial industry whose companies may be employing lobbyists seeking to weaken this bill, I want to urge you, as I said on Wall Street a couple of weeks ago, to join us rather than to fight us."

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