By Simon Johnson

Senator Richard Shelby, ranking Republican on the Senate Banking Committee, today issued the following statement,

“Republicans remain open to finding common ground with Chairman Dodd.  If my Democrat colleagues are interested in enacting reforms that protect American taxpayers, promote economic growth, and preserve the competitiveness of our financial markets, there is no reason that we cannot reach an agreement.  As long as we remain focused on policy and not politics, an agreement is still very possible.  The Republican members of the Committee stand united and ready to work with Chairman Dodd toward that goal.”

This is not a correct or accurate statement with regard to Republican intentions and their work behind the scenes.  At this point, leading Senate Republicans are trying hard to prevent any kind of bill from moving forward.  Their thinking is that there is not a lot of legislative time remaining in 2010 – a week or two lost now can derail completely opportunity for reform along any dimension.

No doubt we will see an increase in contributions by the financial sector in return for actions and statements that prevent effective consumer protection and that push derivatives regulation towards being even less effective.