Mitch McConnell is doing his best to kill financial regulatory reform by Luntzifying his "just say no" position on the financial reform bill that's being worked on in the Senate. He says he has the votes to kill it on the floor. What cowards and Wall Street hacks.

Mitch McConnell has rounded up the necessary votes to block Democrats from bringing Wall Street reform to the Senate floor, a spokesman for the Senate Minority Leader said on Friday afternoon.

Senate Majority Leader Harry (D-Nev.) said on Thursday he planned to bring the bill to the floor next week where it would be debated and amendments added. McConnell has now persuaded 41 Republicans to vote against debating reform.

'We simply cannot ask the American taxpayer to continue to subsidize this 'too big to fail' policy. We must ensure that Wall Street no longer believes or relies on Main Street to bail them out. Inaction is not an option," McConnell writes in a letter to Reid that was provided to HuffPost.

Democrats have been battering McConnell all week for his firm opposition to the Democratic reform effort.

Reid spokesman Jim Manley told HuffPost that Reid will be moving ahead regardless.

"Congratulations. I hope they feel good," said Manley. "They've got 41 signatures on a weak, watered-down letter that simply calls for more negotiations. If they are at all serious, they will simply let us go to the bill next week and let the amendment process begin."

Manley said the bill will be brought up for a vote on a motion to proceed to debate later this coming week.

Different reports say that the Republicans might not stay united.

One report says:

But one Republican financial lobbyist predicts a domino effect if Republicans get on board: “If one goes, 20 will go. It will be ‘open the floodgates.’”

That's more of a dream than reality though and I don't doubt that right now McConnell has his 41. He seems to me to be bloviating a little too much at this point though.

Paul Krugman responds to McConnell's antics and hits him hard:

Well, Mr. McConnell is trying. His talking points come straight out of a memo Frank Luntz, the Republican political consultant, circulated in January on how to oppose financial reform. “Frankly,” wrote Mr. Luntz, “the single best way to kill any legislation is to link it to the Big Bank Bailout.” And Mr. McConnell is following those stage directions.

It’s a truly shameless performance: Mr. McConnell is pretending to stand up for taxpayers against Wall Street while in fact doing just the opposite. In recent weeks, he and other Republican leaders have held meetings with Wall Street executives and lobbyists, in which the G.O.P. and the financial industry have sought to coordinate their political strategy.

And let me assure you, Wall Street isn’t lobbying to prevent future bank bailouts. If anything, it’s trying to ensure that there will be more bailouts. By depriving regulators of the tools they need to seize failing financial firms, financial lobbyists increase the chances that when the next crisis strikes, taxpayers will end up paying a ransom to stockholders and executives as the price of avoiding collapse.

I agree with mcjoan when she says:"As long as Dems are feeling like bringing a fight to Republicans on financial reform, then they should go all in, and include a strong, independent Consumer Financial Protection Agency."

Simon Johnson and James Kwak have penned a great op-ed in The Hill saying that we need to have a strong CFPA and the threats that are in its way:

We have been and remain advocates of a strong, independent CFPA for familiar reasons: the increasing use of product complexity as a way to hide fees; the vastly unequal bargaining power between consumers and the oligopolies that dominate many financial products; the need for uniform standards that apply to non-bank institutions as well as traditional banks; and the abject failure of existing regulators to enforce those laws that did exist....

Given the political appeal of stronger consumer protection, it may be difficult for opponents to take a strong line against a new agency (although the Chamber of Commerce has done its best). So opposition will most likely focus on weakening consumer protection behind the scenes...read on

It's a great piece. I'm not an economist so I try and link the bright people on this topic and weigh in more on its political ramifications, but just for the sake of the nation, we need real financial regulations. A complete economic meltdown has already happened and it will happen again unless a strong CFPA and strict regulations are implemented to watch over the financial sector. Mitch McConnell and the GOP are acting like true paid-off shills for their Wall Street brethren. They could have taken the high road on this one issue, but that's impossible since it's all about the 2010 midterms now instead of the people who elected them.

It's getting to the point where I don't even want to read Simon Johnson anymore. Yes, he's right. If we reduce oversight safeguards to "trust us," we have a system far too ripe for corruption - in fact, almost asking for it:

Buried in the late wire news on Friday – and therefore barely registering in the newspapers over the weekend – Treasury announced the rules for pricing its option to buy shares in banks that participated in TARP.

The Treasury Department said the banks will make the first offer for the warrants. Treasury will then decide to sell at that price or make a counteroffer. If the government and a bank cannot agree on a fair price for the warrants, the two sides will have the right to use private appraisers.

This is a mistake.

The only sensible way to dispose of these options is for Treasury to set a floor price, and then hold an auction that permits anyone to buy any part – e.g., people could submit sealed bids and the highest price wins.

In Treasury’s scheme, there is significant risk of implicit gift exchange with banks - good jobs/political support/other favors down the road – or even explicit corruption. For sure, there will be accusations that someone at Treasury was too close to this or that bidder. Why would Treasury’s leadership want to be involved in price setting in this fashion?

Treasury apparently sees corruption as an issue about personalities (i.e., WE aren’t ever corrupt) rather than about institutional structure. For example, if you create an arrangement that easily permits corruption, such as through nontransparent decision making or negotiation around warrant pricing, you set up incentives to be corrupt. Either existing people change their behavior, or new people will seek appointment in order to participate in corruption.

This is also a point, by the way, that Treasury has been making for years through its representatives at the International Monetary Fund – including during the Clinton Administration, when the same people were running U.S. economic policy as now. It’s a good point and never easy for countries-with-potential-corruption to hear. It applies as much to the United States as to anywhere else.

Treasury will argue the disposal of warrants is a one-off event, but this is not a plausible line: it is part of a much longer series of nontransparent decisions over finance. The attitude that “we can be nontransparent because we will never be corrupt” creates reputational risk for both Treasury and participating banks. If extraordinary support for the financial sector lasts several years, we will likely have at least one time-consuming and damaging investigation into all the details of these settlements.