WASHINGTON — The death of Sen. Robert Byrd, D-W.Va., threw the fate of regulatory reform legislation into doubt Monday, just days after lawmakers concluded a grueling two-week conference process.

While the House is still expected to pass the final bill soon, it was unclear when the Senate would act, or whether Democrats still had enough support to enact it.

Byrd's death early Monday came three days after Sen. Scott Brown, R-Mass., threatened to yank his support for the bill. Brown's vote is seen as vital to reach the necessary 60 votes to push the legislation to final enactment.

"Between Brown's suggestion that he may not vote for it and with Byrd's passing, now they have to scramble to get the votes," said Brian Gardner, an analyst with KBW Inc. "It may get delayed. If it doesn't get wrapped up this week, it certainly adds a level of drama and a level of uncertainty. That uncertainty can lead to some mischief."

Ultimately, most observers said, reform is still likely to be enacted. But with legislation that has already included dozens of fits and starts, the last-minute drama over votes made many uneasy.

The reform bill had little margin for error even before Byrd's death.

Though four Republicans, including Brown, supported the legislation during Senate debate, two Democrats opposed it — Sens. Maria Cantwell and Russ Feingold.

Without Byrd, whose death knocked Democrats down to 58 votes, Democrats need to hold all Republican votes or pick up one or both defectors to get the necessary 60 votes.

For his part, Brown cast doubt on his support in a statement issued Friday, saying that a provision added at the eleventh hour to subject banks to a tax to pay for costs from the bill was troublesome.

"I was surprised and extremely disappointed to hear that $18 billion in new assessments and fees were added in the wee hours of the morning by the conference committee. My fear is that these costs would be passed on to consumers," Brown said. "I've said repeatedly that I cannot support any bill that raises taxes."

Chris Low, a chief economist with First Horizon National Corp.'s FTN Financial, said Democrats "need Scott Brown."

Alternatively, he said they will need to pressure Feingold and Cantwell to switch sides. The problem, Low said, is that leadership cannot offer much in return for their votes, at least not on financial reform.

Under the conference rules, the legislation cannot be changed on the floor in either chamber, leaving lawmakers with a straight up or down vote on the bill.

"At this point you can't really offer anyone anything," Low said. "And there's a real sense in Congress that they are running out of time to finish up the things they want to do for the year. They only have seven legislative weeks left."

Further complicating the situation is whether the other three Republican supporters — Sens. Susan Collins and Olympia Snowe of Maine and Sen. Chuck Grassley of Iowa — could join Brown in turning against the bill. Republicans historically are opposed to any increase in taxes.

"I think it's a lot more serious than people think," said an industry lobbyist, who spoke on condition of anonymity. "Any time you raise taxes, Republicans typically have an ideological preference against it. There's a possibility you lose all four Republicans. The outcome of the bill hangs in the balance."

Spokespeople for Grassley, Brown, Snowe and Collins would not say how their bosses would vote on the regulatory reform bill Monday, and a spokesman for Cantwell said that they were still reviewing the legislation. Feingold released a statement Monday that said he would not support the bill.

"As I have indicated for some time now, my test for the financial regulatory reform bill is whether it will prevent another crisis," Feingold said. "The conference committee's proposal fails that test and for that reason I will not vote to advance it."

The House was not expected to vote on the bill until Wednesday, and the Senate had been expected to vote on Thursday.

But it is now unclear when Congress will observe the death of Byrd, who had been the chamber's longest-serving senator, and sources said his funeral could delay a vote on regulatory reform until after the Fourth of July recess. "The real question is the Senate," said Bert Ely, an independent analyst in Virginia.

"No. 1, what is the schedule going to be in light of Byrd's death? And No. 2, where are they going to get the votes? … For those who want to reopen it, this is the opportunity to try to go back to the table and renegotiate."

If either chamber were to reject the bill, the process would have to start from scratch, a potentially fatal problem for the legislation.

Still, most observers said Monday that Congress was still likely to enact a reform bill, whether this week or in a few weeks' time.

Patrick Hughes, a vice president with Height Analytics, said Cantwell and Feingold may still be persuaded to vote for cloture, a process that requires 60 votes and moves the bill toward final passage, while still opposing the bill on final passage, which would require only a simple majority to pass.

"There is a possibility that the two Democratic senators who voted against the bill the first time, could vote to allow for a final vote on the bill," Hughes said. "Our expectation remains that President Obama will have the chance to sign the financial regulatory bill by July Fourth."

Joseph Engelhard, a senior vice president with Capital Alpha Partners LLC, agreed.

"It might delay things in the Senate, but ultimately I don't think it's going to change the final outcome," he said. But some supporters of the bill were taking no chances. Consumer groups launched a lobbying effort on Monday to convince Brown not to change his vote and persuade Cantwell and Feingold to back it.

"We are pretty confident that this is going to go forward, but we are working it really, really hard," said Ed Mierzwinski, the consumer program director for the U.S. Public Interest Research Group. "We are calling out the troops to call Scott Brown. We are calling out the troops to call every member, but particularly the Republicans who voted for it, and we are putting out letters to everyone in the House."

The choice comes down to "supporting Main Street or Wall Street," Mierzwinski said.

"This thing will pass, but we'll have a little more drama this week," he said.

Register or login for access to this item and much more

All On Wall Street content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access