Cornhusker Kickback, Part Deux

Months after making an ill-fated stand for the “Cornhusker Kickback” in health care legislation, Sen. Ben Nelson (D-NE) has again put himself in the spotlight. Yesterday he was the lone Democrat to vote against moving forward on the Senate’s financial regulation bill.

Nelson claimed in a statement, “We need to regulate Wall Street without doing harm to Main Street, and I’m hearing from Main Street businesses in Nebraska that have concerns about the current bill adversely impacting them.” But given his past attempts to extract special favors for Nebraska, not everyone is convinced of Nelson’s sincerity. Liberals such as Harold Meyerson and Matt Yglesias have been particularly critical.

Conservatives aren’t going easy on him either. Speaking this afternoon at Heritage’s Bloggers Briefing, Rep. Ed Royce (R-CA), a member of the Financial Services Committee and leading critic of the Senate bill, questioned Nelson’s motives.

“Isn’t that true to form? Isn’t that what Ben Nelson always does?” Royce said. “I assumed it was simply part of the bargaining process. Why would he let a bill go without the opportunity to see how much he could bid up the return for his vote?”

Royce said Nelson probably expects Senate Banking Chairman Chris Dodd (D-CT) “to come to the table, give him what he wants, and then he’s going to move forward and let the bill go.”

In fact, according to The Associated Press, Nelson was doing exactly that yesterday prior to the vote:

In a statement, Nelson, a conservative Nebraska Democrat, said his vote reflected concerns about the bill raised by Nebraska businessmen. Before the vote, Nelson huddled with Senate Banking Committee Chairman Chris Dodd, D-Conn., to discuss a regulatory item of interest to one Nebraska businessman in particular — billionaire investor Warren Buffett.

The legislation would require derivatives — previously unregulated exotic securities — to be traded in open exchanges and cleared through a third party that would guarantee the contracts. Companies trading in derivatives would also have to put up collateral to back up the derivatives contracts.

An agreement Monday between Dodd and Agriculture Committee Chairwoman Blanche Lincoln, D-Ark., would exempt existing derivatives contracts from the clearing requirements.

Lincoln’s proposal also would have exempted existing derivatives contracts from margin requirements, or collateral. But Dodd succeeded in eliminating the collateral exception. That would potentially add significant costs to companies with derivatives portfolios. Barclay’s Capital estimates that Buffett’s Berkshire Hathaway Inc.’s derivatives portfolio is valued at $63 billion and that the Senate provision would cost it $6 billion to $8 billion in collateral.

No wonder trust in government is at an all-time low and Americans have lost faith in Congress.