Brown and Snowe on Board with Dodd-Frank

This huge Rube Goldbergian contraption seems finally on the verge of becoming a law.

Senators Scott Brown and Olympia Snowe, of Massachusetts and Maine respectively, say that they are now on-board, which should give the bill's proponents the votes they need to overcome any filibuster.

Byrd's replacement? That is still an unknown. Governor Manchin has the power to make the appointment, and he is taking his time. Some announcement is likely this weekend.

Still, the Dood-Frank bill should come to a vote tomorrow, Thursday, even with that seat still empty. The Democrats, it appears, don't need that vote. They have, with Brown and Snowe and one other, a total of three Republican votes, and if they stay together as a party that should do the job.

This blog has been following the developments regarding this legislation for months. There was, for example, this observation last month about the fiduciary-obligation issue, and this one about the Volcker rule.

Going back to January, I wrote about the ambivalence of the President on these matters.

But here we are. It will probably be a done deal tomorrow. A small part of it is the "Collins amendment," a provision that would, after a three-year phase-in beginning on January 1, 2013, eliminate Trust preferred securities as Tier 1 capital for bank holding companies that had $15 billion or more in assets as of December 31, 2009. Where do you think that third Republican vote comes from? In the name of this amendment lies a clue, grasshopper.

This could all result in certain bank holding companies having to raise significant amounts of new Tier 1 capital. And that, in turn, (as the Wachtell Lipton law firm asserted in a memo they sent out yesterday) could result in significant capital structure inefficiencies.

That is just one of many respects in which this bill just seems to be a flailing-of-the-arms by politicians who don't have a clue what to do, but who feel strongly that they ought to do "something". Beware always the siren call of doing "something"!!!