Opinion: Financial reform could turn on Blanche Lincoln’s re-election bid in Arkansas -- derivatives anyone?

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Blanche Lincoln is running for her political life in Arkansas. And if she falls, the sweeping reform of Wall Street that Democrats hope will bolster their case for reelection could be one of the casualties.

Chair of the Senate Agriculture Committee, Lincoln fought for language that would require Goldman Sachs Group Inc., JPMorgan Chase & Co. and other players in the $605-trillion derivatives market to curtain off swap trades from regular banking. Wall Street argues that the Lincoln Rule would cripple their ability to stay in business. Key players in the administration -- Federal Reserve Chairman Ben S. Bernanke, Treasury Secretary Timothy F. Geithner and Senate Banking Committee Chairman Christopher J. Dodd -- worry that Section 106 could disrupt the economy.

But Lincoln, responding to voter anger about Wall Street’s greed at the expense of Main Street, has resisted efforts to soften the rule. As the Senate bill goes to conference with the House on its version, Lincoln heads back out to the campaign trail, facing a June 8 runoff election against fellow Democrat Lt. Gov. Bill Halter. The race will likely come down to turnout -- whether Lincoln’s organization or Halter’s coalition of liberal advocacy and labor union supporters best get out their vote.

Much hangs in the balance.

If she loses, perhaps senators like Dodd who have qualms about Section 106 will be in a stronger position to scuttle it, confident they are not hurting the cause of an incumbent Democrat. Or she could decide to make this her legacy, insisting that conferees keep the provision as the legislative capstone of her Senate career.

Things will get even more interesting if she wins the primary to face Republican John Boozman in the fall campaign. A strong Lincoln platform against Wall Street could force her GOP opponent to play defense. In that case, President Obama might find himself signing Section 106 into law.

Ah, politics.

-- Johanna Neuman

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