LIVEBLOG: Financial Regulatory Reform Senate Vote

**Check this post for updates throughout the day**

UPDATE: 6:35 p.m.

Senate Democrats’ efforts to advance a financial reform bill were blocked when the planned procedural vote failed to gain the 60 votes needed to move the measure forward. The 57-41 vote split along party lines, with Republicans uniformly opposed to advancing the measure. Sen. Ben Nelson (D-NE) was the only Democrat to oppose the measure. Discussions of a bipartisan agreement still continue, however, according to C-SPAN's report.

Reuters (via the New York Times) reported that modified legislation is expected to return to the Senate floor soon.

The Reuters article noted that the legislation, as proposed, would set up a new "orderly liquidation" process for dismantling large financial firms in distress, which is intended to prevent more taxpayer bailouts like that of insurer AIG in 2008, while also averting bankruptcies like the shocking collapse of Lehman Brothers in the same year that the paralyzed capital markets.

The bill would also have created a new financial consumer protection watchdog inside the Federal Reserve; imposed regulations on the unpoliced $450-trillion over-the-counter derivatives markets; curbed risky trading by banks; forced hedge funds to register with the government; and cracked down on debt securitization, according to Reuters.

Republican Sen. Scott Brown told CBS News that "my vote is not a vote against financial reform; instead it's a vote to insist that the parties continue bi-partisan negotiations to come up with a commonsense bill we can all be proud of. As currently written, the legislation contains loopholes that could leave the taxpayers on the hook for future bailouts of Wall Street."

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UPDATE: 4:08 p.m.

Senate Republican leaders told The Hill they are confident they will hold their conference together to defeat a motion to begin debate on the financial regulatory reform bill, which is up for a procedural vote in less than an hour. That setback would send Democrats and Republicans back to the negotiating table to work out a deal to allow legislation to pass.

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UPDATE: 1:49 p.m.

Senate Republicans are working to finalize their own version of legislation to tighten regulation of the nation’s financial system, and aides told the New York Times that it could be put forward as a rival to the Democrats’ proposal if a bipartisan deal is not reached.

Aides to Republicans on the banking committee said on Monday morning that there were still significant loopholes in the legislation that could yield future taxpayer-financed bailouts of big banks, according to the New York Times report, which also said the GOP plans to propose regulatory language aimed at Fannie Mae and Freddie Mac. Democrats say they need to be dealt with in separate legislation, according to the Times.

Meanwhile, financial stocks fell as traders bet that proposed derivatives regulation would hurt revenue at most big banks, according to the Wall Street Journal. The bill includes a controversial provision that would force banks to spin off their swaps desks to be eligible for financial assistance from the Federal Reserve and Federal Deposit Insurance Corporation, the Wall Street Journal said.

Given the climate, both Republicans and Democrats have said they eventually expect Congress to approve an overhaul of the financial regulatory system more sweeping than any since the aftermath of the Great Depression, according to the Times.

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10:06 a.m.

A sweeping regulatory reform package, including new rules for derivatives, is slated for a crucial test vote in the Senate later today.

Senate Majority Leader Harry Reid has set a procedural vote to begin debate on the bill for late on Monday. Republicans have vowed to vote to block consideration of it, although closed-door talks about a bipartisan agreement carried on, according to Reuters.

Senate Republicans said they plan to block efforts to move the bill forward unless Democrats alter central elements of the legislation, the Washington Post reported. Democrats need support from at least one Republican to reach the 60 votes required to overcome a filibuster and proceed with formal debate on the bill, that article said.

Regarding the derivatives market, the Washington Post said in a separate article that the two Democratic Senators charged with writing the rules are near a deal, and will include a provision to require banks to spin off swaps desks.

The New York Times said that this move seems "certain to anger some of Wall Street’s biggest players."

Stay tuned for updates as this story develops.