Senate Republicans voted to block a bill aimed at tightening regulation of the financial system from being debated yesterday, in a move President Barack Obama said American people "can't afford".

The Democrats needed 60 votes from the 100 senators in the house to begin debating the bill, which proposes a government levy on big banks, changes to rules on derivatives trading and the establishment of a consumer financial protection agency.

The White House officially endorsed the bill before the vote, and had been hoping that the $1bn (£650m) fraud prosecution of Goldman Sachs would give fresh wind to anti-Wall Street sentiment, making the case for accepting the proposals unavoidable.

However the Democrats fell three votes short of the required number, with 39 Republicans voting against the bill and one Democrat, senator Ben Nelson, also opposing the motion. The final vote was 57-41, with Democrat Senate majority leader Harry Reid switching to a 'no' vote when the result became clear – a political manoeuvre that will enable Reid to call for a new vote as early as today, with Democrats convinced people pressure will eventually convert Republican senators, ensuring the bill is passed.

Both parties have made it clear they want new legislation, with Democrats and Republicans keen to bolster their vote ahead of November's congressional elections through a show of sternness towards the financial sector. Republicans have joined in Democrat criticism of Wall Street and have voiced hope that new measures will ultimately be introduced, but say the bill as it stands does not go far enough in its reforms.

Senate Republican leader Mitch McConnell had argued before yesterday's poll that a vote to delay debate was not a vote against regulation, but for a bipartisan bill.

"All of us want to deliver a reform that will tighten the screws on Wall Street," McConnell said. "But we're not going to be rushed on another massive bill based on the assurances of our friends on the other side."

Richard Shelby, the top Republican on the banking committee, also sought to clarify the opposing senators' stance.

"Most Republicans want a bill, but they want a substantive bill," he said.

However the Democrats are said to be prepared to force Republican senators to block the present bill time and again until their unity cracks.

"I don't think it's a tenable political position for the Republicans to be in," White House spokesman Robert Gibbs said yesterday, while Reid mocked the opposition's cohesion.

"As far as I can tell, the only thing Republicans stand for is standing together," he said.
The White House had issued its endorsement of the bill less than an hour before the vote, stressing that Obama would oppose adding any loopholes. Following the vote, the president said he was "deeply disappointed" and urged senators to put the interests of the country ahead of their party.

"Some of these senators may believe that this obstruction is a good political strategy, and others may see delay as an opportunity to take this debate behind closed doors, where financial industry lobbyists can water down reform or kill it altogether," Obama said in a statement. "But the American people can't afford that."