Senate Minority Leader Mitch McConnell (R-Ky.) met with President Obama and other congressional leaders at the White House Wednesday. W.H., GOP clash over banking reform

A bipartisan meeting on financial regulatory reform between President Barack Obama and GOP congressional leaders broke up early and acrimoniously Wednesday – as the White House warned Republicans against trying to water down the bill.

“[Obama] made clear that bipartisanship should not be equated with an openness to lobbyists’ loopholes and special interest carve-outs and that he would be unwilling to negotiate on some key issues,” said White House Press Secretary Robert Gibbs, in an e-mailed readout of the meeting, “And that he could not accept bad policy” in pursuit of a deal with the GOP.


“It appears the bipartisan talks have broken down,” pronounced Senate Minority Leader Mitch McConnell (R-Kent.), after meeting for less than an hour with Obama, House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-Nev.).

“The strings were kind of pulled by the Democratic leaders,” added McConnell, who said that Democrats “are trying to jam us” for political gain.

"If there's one lesson that we've learned," said Obama in televised remarks prior to the meeting, "it's that an unfettered market where people are taking huge risks and expecting taxpayers to bail them out when things go sour is simply not acceptable."

Pelosi said Obama and the Democrats confronted McConnell and House Minority Leader John Boehner, saying they asked the Republicans, “Do you want to rein in Wall Street?”

Despite McConnell’s claims, Democratic staffers have expressed confidence that regulating Wall Street is such a poisonous issue for the GOP this fall that many in the party will ultimate side with Democrats – with as many as half a dozen defections possible.

Senate Democrats are lining up behind a proposal passed by lame-duck Banking Committee Christopher Dodd (D-Conn.) that would create a consumer protection bureau with authority to write rules governing all financial entities, including banks and other institutions, in addition to "authority to examine and enforce regulations for banks and credit unions with assets over $10 billion and all mortgage-related businesses."

Acrimony aside, Dodd and Sen. Richard Shelby (R-Ala.), the ranking Republican on the committee, are due to meet this afternoon in hopes of hashing out a broader deal. But Dodd earlier Wednesday threatened to end negotiations with Republicans on a financial regulatory reform bill if they continue to lead what he called a misinformation campaign based on Wall Street talking points.

In a blistering floor speech Tuesday, McConnell laid out the GOP’s counterargument – claiming the Democrats’ bill would put taxpayer on the hook for future bailouts.

Emerging from his Tuesday meeting, McConnell hammered home that point, saying, “It’s a bill that actually guarantees future bailouts of Wall Street banks, if you look carefully… hat is clearly not the direction the American people want to go.”

A seething Reid, squinting in the bright sunlight of the West Wing driveway, called McConnell’s claim that Democrats had abandoned talks a “figment of his imagination” and vowed to pass the overhaul quickly.

The White House has accused McConnell of parroting the party’s talking points, driven by polls.

Participants described the meeting as “lively” and “candid” but demurred when reporters pressed him on the number of GOP “yes” votes he hoped to get.

“It’s difficult to work with the party of no,” he said.

The majority leader, facing a tough reelection fight in Nevada this fall, seized on a FOX Business News report that McConnell and Sen. John Cornyn (R-Tex.) recently met privately with about 25 hedge Wall Street executives, many of them hedge fund managers, to talk fundraising and regulatory reform.

McConnell dodged questions about the meeting saying only that he had heard criticism of the Dodd bill from “community banks in Kentucky.”

But when a reporter pressed him about his relationship with Wall Street, McConnell said, “Sure, we talk with people all the time, I’m not denying that,” – saying it was “inaccurate to say the GOP was fighting for the big banks.

As the meeting took place, Boehner’s staff released a list of talking points the leader planned to make, including the argument that the Dodd bill “sets up a huge new bureaucracy” and “does nothing to address the root causes of the Fannie & Freddie.”

But a person familiar with the situation that Boehner “actually said none of that” during the brisk, businesslike meeting.

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