WASHINGTON — Senate Democrats said Sunday that they had bridged internal party differences and coalesced around a plan to tighten regulation of derivatives, the complex financial instruments that were a major factor in the 2008 economic crisis.
The proposed derivatives rules are an important part of the effort to strengthen regulation of the nation's financial system, and seem certain to infuriate some of Wall Street's biggest players.
The agreement among Democrats would combine overlapping proposals on derivatives by the banking and agriculture committees, and it raised the pressure on Senate Republicans, who said that they were still fighting for changes to the bill and planned to block the start of floor debate in a first procedural vote today.
The desire by Democrats to move quickly on the regulatory bill gained new urgency over the weekend, as party leaders said they would try to squeeze major immigration and energy bills onto a tight congressional calendar, which will include efforts to pass a budget and the confirmation of a new Supreme Court justice.
Democrats had been divided over whether to tackle immigration this year, but they were galvanized last week by a tough new law in Arizona.
But their new resolve has caused some tumult on Capitol Hill. Over the weekend, Sen. Lindsey Graham, R-S.C., said if the Senate gave priority to the immigration measure, he would withdraw his support for a bill on climate change and energy, of which he is a main sponsor and partner with Democrats.
Rahm Emanuel, the White House chief of staff, praised Graham's efforts at collaboration with Democrats, in a sign that the White House hoped to regain Graham's support. "Everyone knows of Lindsey and my friendship and his serious efforts at solving the nation's challenges," Emanuel said. "Any Republican who tries bipartisanship faces political peril." He added, "Their party's activists are all about opposition at all costs. This is not about what comes first."
Officials said the accord on derivatives included a number of the tougher provisions put forward by the Agriculture Committee, including one that is fiercely opposed by major banks because it would force them to spin off much of their derivatives business. The rules say any bank dealing in swaps, a popular and lucrative derivative, would be barred from the Federal Reserve's emergency borrowing window and also from federal deposit insurance.
The agreement underscored the rising confidence among Democrats and the Obama administration that Senate Republicans could not hold ranks against the bill for much longer, given the high-stakes election year and the widespread public outrage at Wall Street.
Officials from Goldman Sachs, including its chief executive, Lloyd C. Blankfein, are scheduled to testify at a hearing Tuesday before the Senate Permanent Subcommittee on Investigations, where Democrats plan to spotlight some of Wall Street's questionable business dealings and explore the company's role in the financial collapse.
Federal regulators last week accused Goldman Sachs of fraud. And Saturday, Sen. Carl Levin, D-Mich., the chairman of the investigations subcommittee, released e-mail messages showing that Goldman knew it made "some serious money" by placing negative bets against the housing market.
Given the climate, both Republicans and Democrats have said they eventually expect Congress to approve the most sweeping overhaul of the financial regulatory system since the aftermath of the Great Depression, and new rules bringing greater transparency to the trading of derivatives are one of the bill's more crucial components.
But final passage of the measure would come later rather than sooner if Republicans have their way. Sen. Richard C. Shelby of Alabama said Sunday his party was still prepared to block debate of the bill as he fights for additional changes, including what he described as tight guarantees against future taxpayer bailouts of banks. Shelby said he was hopeful the sides would reach an agreement, but he thought it unlikely that it would happen before the vote today. "I think we will get a bill," Shelby said on NBC's Meet the Press.
Shelby, and the banking committee chairman, Christopher J. Dodd, Democrat of Connecticut, who appeared together on the show, are scheduled to meet this afternoon.
Democrats did not immediately release details of the agreement on derivatives between Dodd and Sen. Blanche Lincoln, D-Ark., and chairwoman of the Agriculture Committee. Both had called for most derivatives contracts to be traded on a public exchange and to be processed, or cleared, through a third party. The Agriculture Committee language had the support of Republican Sens. Charles Grassley of Iowa and Olympia Snowe of Maine.