WASHINGTON — With one Democrat absent and two others voting no, the Senate failed to get the 60 votes needed to avoid a filibuster and bring the huge overhaul of financial regulations to a vote.
Democrats and Republicans have been trying to reach agreement on a few key issues, but some disputes apparently are lingering over several amendments.
Another vote is expected on Thursday, and Democratic leaders were optimistic that they could overcome the procedural hurdle.
The Democrats fell two votes short, though the vote was 57-42. Majority Leader Harry Reid of Nevada changed his vote to 'no' to make it easier to hold another vote. He blasted Republicans after the vote for voting to "protect the big banks on Wall Street."
Missing from the action was Sen. Arlen Specter, who lost a primary election Tuesday in Pennsylvania. Sen. Maria Cantwell of Washington and Russ Feingold of Wisconsin voted against ending debate.
Cantwell wants votes on two amendments -- one to tighten new proposed regulations on complex financial derivatives and another to restore a prohibition against federally insured commercial banks also doing investment banking. Feingold also wants a vote on the banking prohibition.
"The test for this legislation is a simple one -- whether it will prevent another financial crisis," Feingold said after the vote. "As the bill stands, it fails that test. Ending debate on the bill is finishing before the job is done."
Two Republicans, Susan Collins and Olympia Snowe, both of Maine, split with their party and voted to end debate on the legislation.
Should the Senate agree to end debate, that vote would start a maximum 30-hour clock ticking on three weeks of debate on the landmark bill. The move required 60 votes, meaning Democrats needed the support of some Republicans. Final passage of the legislation requires just a simple majority of the 100-member Senate, which is expected to be met easily, as soon as Thursday.
The legislation is a top priority of the Obama administration and congressional Democrats.
It would create an independent bureau in the Federal Reserve to protect consumers in the financial marketplace, grant the government power to seize and dismantle teetering firms whose failure would pose a danger to the economy, impanel a council of regulators to monitor the financial system for major risks and impose strict regulations on complex financial derivatives.
Once the Senate passes its bill, it must be reconciled with a somewhat more industry-friendly version passed by the House in December. Business and financial groups still aren't happy with the Senate legislation. But the House and Senate are expected to finish their work within weeks, allowing Obama to sign the bill into law by early summer.
Democrats have spent the last week striking deals with some Republicans to overcome sticking points as both parties want to show they are cracking down on Wall Street and ending the era of government bailouts.
Some battles still loomed before final passage, including an attempt by auto dealers to be exempted from oversight by a new Consumer Financial Protection Agency.
Despite the changes made in the bill over the last three weeks, Senate Republican leaders remained strongly opposed. They complained the legislation fell far short of real reform.
They have criticized the new consumer agency as an unnecessary expansion of government power that will impose onerous new regulation on small businesses.
And Republicans are particularly upset that the bill does not address the futures of housing giants Fannie Mae and Freddie Mac, the former government-sponsored enterprises, or GSEs, that were seized by regulators in 2008 and have received $126 billion in bailouts.
"Now, everyone recognizes the need to rein in Wall Street to prevent another crisis. But the bill the majority wants to end debate on [Wednesday] does not do that,'' said Senate Minority Leader Mitch McConnell (R-Ky.). "Instead, it uses this crisis as yet another opportunity to expand the cost and size and reach of government," he said. "It punishes Main Street for the sins of Wall Street. Worst of all, it ignores the root of the crisis by doing nothing to reform the GSEs."