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Financial overhaul cast into doubt

Just days after congressional negotiators agreed to a far-reaching package of financial reforms, the death of Sen. Robert C. Byrd on Monday threw into doubt the Senate's hope of passing the legislation this week.

And there could be more problems in the Senate for the sweeping overhaul of financial regulation, President Obama's top legislative priority, after negotiators surprisingly added a $19 billion tax on large financial institutions in reconciling House and Senate versions of the bill late last week.

The defection of just a single supporter in the Senate would be enough to block the bill's passage.

Sen. Scott Brown of Massachusetts, one of the few Republican supporters, said he was "extremely disappointed" that the tax on big banks, hedge funds and other companies was added and strongly suggested he would change his vote.

Brown's office did not say Monday whether he would vote against the legislation. But in a statement Friday, he said he feared that the tax, designed to cover the cost of the legislation's new regulations and oversight, would be "passed on to consumers in the form of higher bank, ATM and credit card fees and put a strain on lending at the worst possible time for our economy."

"I've said repeatedly that I cannot support any bill that raises taxes," Brown said.

Another Republican supporter, Sen. Susan M. Collins of Maine, said Monday she also was concerned about the $19 billion tax and was "taking a look" at it.

Because of congressional procedures, it would be difficult to remove the bank tax from the bill without opening the legislation to a host of other proposed changes from opponents, further delaying -- and possibly derailing -- the process. One financial industry executive said such a move would open a Pandora's box.

The House was prepared to approve the final version as early as today, but stunned senators were still grappling with the death of Byrd, the legendary 92-year-old West Virginia Democrat, as Obama administration officials scrambled to push the legislation over the finish line this week.

"Byrd was obviously a very, very reliable Democratic vote," said Jennifer Duffy, who monitors the Senate for the Cook Political Report in Washington, a nonpartisan newsletter.

"Democrats are going to have to go back and count noses on things like financial reform and make sure they have the votes," she said. "While they never had a margin for error, it's slimmer now."

West Virginia Gov. Joe Manchin III, a Democrat, will appoint a successor and is almost certain to name another Democrat. But he is unlikely to make the choice for several days.

That would make it impossible for Senate Democratic leaders to pass the financial reform legislation Thursday as they had hoped unless they can find another vote to reach the 60 needed to overcome an expected Republican filibuster.

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