The Senate tonight passed a procedural amendment that will allow debate on S. 3217, the Wall Street Transparency and Accountability Act of 2010, to proceed.

After three days of impasse, Senate Majority Leader Harry Reid, D-Nev., asked at 6:15 p.m. for unanimous consent to proceed to floor action on the omnibus financial services reform legislation, and, hearing no objection, ruled the motion in order.

In a statement on the Senate floor, Reid said he would introduce the first amendment. That amendment, he said, would be introduction of the version of the bill reported out in late March by the Senate Banking, Housing and Urban Affairs Committee as modified by an agreement Sunday that toughened the derivatives regulation provisions.

Those provisions represented a compromise between the derivatives provisions in the Senate Banking bill and the tougher provisions reported out last Wednesday by the Senate Agriculture Committee.

The Senate then adjourned without an agreement as to a list of amendments that would be considered.

A Reid spokesman said an amendment schedule would be prepared Thursday. She could give no estimate as to how many amendments would be ruled in order, or how long floor action on the bill would take. Other Senate staffers said debate will start at 12:15 p.m. Thursday and could go on for two weeks.

Reid’s simple request for unanimous consent climaxed a tumultuous week in which Republicans three times blocked floor consideration of the bill.

The impasse ended in late afternoon, when Sen. Mitch McConnell, R-Ky., announced a meeting of the Republican caucus that he would allow floor debate to proceed.

He did so after Sen. Richard Shelby, R-Ala., the highest-ranking Republican member of the Senate Banking Committee, issued a statement indicating that talks on compromise legislation with Sen. Christopher Dodd, D-Conn., had failed.

Dodd, chairman of the Banking Committee, is the primary sponsor of S. 3217. He has been in charge of efforts to craft the bill since last fall, and he first introduced it in early December. He decided in late January to go back to the drawing board after failing to win any Republican support for the bill.

With members of the committee breaking into two-man bipartisan teams, the legislation was reworked, but, in the end, Republicans declined to support it.

McConnell said Republicans had decided to allow floor debate on the bill after winning a commitment from Dodd and other Democrats that language drafted by Republicans McConnell believed would put an end to government bailouts of failing large banks.

Democrats, led by Dodd, argued that McConnell’s arguments were specious, that the bill as presented to Republicans would do just that, and furthermore, that Sen. Bob Corker, R-Tenn., had played a key role in drafting the provision in contention.

But McConnell disagreed. He said the decision of Republicans to use their 41 votes to block floor debate “was instrumental in gaining assurances from Sen. Dodd that changes will be made to end taxpayer bailouts and the dangerous notion that certain financial institutions are too big to fail.”

Earlier, on hearing that McConnell had relented, Dodd said, “Obstruction has wasted enough of the American people’s time and now it’s time to get to work.”

Sen. Susan Collins, R-Maine, apparently helped break the logjam by agreeing to vote to let the Senate debate the bill. Collins said she has concerns about some aspects of the bill, such as what she believes to be weak efforts to address problems at the federal mortgage guarantee agencies. Collins said that she does want to see Congress pass a bill that puts a council in charge of identifying firms that could hurt the economy, and that she does want to see more effective regulation of derivatives.

The life insurance industry has a number of concerns about the bill.

These issues include winning a carve-out in the tough derivatives provisions of the Senate legislation that would allow insurance companies to purchase custom derivatives tailored to the industry’s specific needs. That provision is contained in the House version of the legislation, as well as in the original Dodd version of the bill. However, it was negotiated out in the tougher derivatives regulation provisions demanded by Sen. Blanche Lincoln, D-Ark., chairman of the Ag panel.

Insurers have been trying to win a carve-out in the Democratic version of the bill that would exempt insurers from a provision limiting certain investment activities of financial companies which include deposit-taking banks. That provision was proposed by former Federal Reserve Chairman Paul Volcker and supported by the Obama administration.

A compromise amendment proposed by two Democratic senators provides an exception for proprietary investments on behalf of the insurance company, either through the insurance company or an investment affiliate.

Some insurance companies with limited life insurance activities have accepted this proposed amendment, but insurance companies whose primary business is life are seeking somewhat broader language, according to several insurance industry lobbyists.

The provision would affect life insurers and mutual funds by barring financial institutions that own a bank from investing in or sponsoring a private investment fund or engage in its own proprietary trading system.

At the same time, state insurance legislators and regulators are renewing their efforts to strike language in the legislation creating an Office of National Insurance within the Treasury Department. Failing that, the legislators and regulators are seeking to limit the ability of federal officials to pre-empt state insurance laws.

There are also efforts by some state regulators and legislators to limit the impact of a provision of the Senate bill that would provide uniformity in regulation of surplus lines and reinsurance products. Under these provisions, also contained in the House bill, all multi-state placements of surplus lines and reinsurance products would be governed by the rules of the state in which the transaction is placed.

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For a nostalgic look at where S. 3217 stood a few days ago, please see Corker, Nelson Weigh In On Dodd Billand Financial Services Bill Heads To Senate Floor.