The political faultlines of financial reform are not breaking cleanly along party lines, as Republicans break rank to support it.

Thomas Noyes, UK Gaurdian

Will the GOP block financial reform to extract revenge for healthcare? John McCain, grumpy on a good day, was outright cranky over the passage of healthcare reform, promising “no co-operation for the rest of the year” on any legislation.

But not all Republicans agree they should be the “party of no”. The conservative author (and former George W Bush speechwriter) David Frum criticised fellow Republicans for trying to turn healthcare reform into Obama’s Waterloo instead of trying to get their ideas included in the bill. According to Frum, the result was that “when we went for all the marbles, we ended with none“. Frum’s remarks generated so much heat among conservatives that he resigned from the American Enterprise Institute before the week was out.
Emboldened by their success, Barack Obama and his allies on Capitol Hill wasted little time in placing financial reform next on the agenda. They are betting that a few Republicans will resist the temptation to go for all the marbles by simply opposing any bill.
Two Republican senators had already broken ranks to negotiate a bill with Democrat Chris Dodd, who chairs the Senate finance committee. Last week, Dodd decided to press the issue by releasing his own draft legislation, though he was careful to leave the door open for further negotiations with his Republican colleagues. Dodd’s bill, which runs 1,120 pages, would create a new consumer protection watchdog, regulate the exotic derivatives that have spiralled out of control and build a firewall between commercial banking and investment banking.

After the near-death experience of healthcare reform, one might think that Democrats in Congress would be wary of taking on another large, complex bill that expands government involvement in the private sector. But instead of making things harder, Dodd said that the recent passage of healthcare reform “strengthened our hand” on financial reform.
One Republican senator, Bob Corker of Tennessee, who has been talking with Dodd, thinks his party made a “major strategic error” by walking away from bipartisan negotiations on healthcare, giving Democrats a political advantage. Making things even more complicated for Republicans, another of their senators, Richard Shelby, has engaged in separate talks with Dodd. With the bankers being blamed for the current recession, it seems likely that several other Republican senators will be looking for ways to support financial reform rather than just dig in their heels.

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