The U.S. House of Representatives approved the financial-overhaul bill, moving a step closer to enacting the broadest rewrite of Wall Street rules since the Great Depression.
The House voted 237-192 in favor of the bill. It also will have to be approved by the Senate, which delayed action until after the weeklong July 4 recess, before going to President Barack Obama for him to sign into law.
As debate began today, House Financial Services Committee Chairman Barney Frank discounted Republican criticism that the bill gives regulators new powers to keep insolvent firms alive.
“If an institution has gotten so indebted that it should not be able to pay its debts, we step in and put it out of business,” Frank said.
The legislation, which adopts proposals put forward by the White House last year, would create a consumer financial protection bureau at the Federal Reserve, give the government new authority to liquidate large failing financial firms and set up a council of regulators to monitor threats to the economy. It’s a response to the 2008 crisis that led Congress to set up a $700 billion rescue program to extend aid to large firms including American International Group Inc. and Citigroup Inc.
President Barack Obama called the vote “a victory for every American who has been affected by the recklessness and irresponsibility that led to the loss of millions of jobs and trillions in wealth.” In a statement, Obama said he looks forward to signing a bill after Senate passage.
“This bill is a massive intrusion of federal government into the lives of every American,” Alabama Representative Spencer Bachus, the top Republican on the House Financial Services Committee, said before the final vote. “It will move us further toward a managed economy with the federal government making decisions that have been and should stay in the hands of individuals and private businesses.”
The House rejected a motion offered by Republicans to send the bill back to the conference committee, a procedural effort to essentially kill the legislation. The motion was meant “to ensure a robust and comprehensive audit of the Federal Reserve and to address a small but significant job-killing measure,” Republicans said in a news release.
The Senate’s final vote will be delayed until the middle of July because of the death of Senator Robert Byrd, a West Virginia Democrat. Byrd’s body will lie in repose in the Senate chamber tomorrow and a memorial service will be held in Charleston, West Virginia, on July 2.
Not Enough Time
Senate Majority Leader Harry Reid, a Nevada Democrat, said today that under the chamber’s rules there isn’t enough time to schedule a vote before lawmakers leave for the July 4 recess. “I can’t procedurally get to it,” Reid said.
Senate Banking Committee Chairman Christopher Dodd said a vote this week would be trying to “squeeze too much in” to senators’ schedules. A weekend session after Byrd’s memorial service in West Virginia might risk losing some votes if senators felt pushed to return to Washington, he said.
“I am trying to be very patient,” said Dodd, who acknowledged his disappointment that Congress won’t be enacting the legislation this week. When Congress returns from the weeklong recess “I am still very optimistic we will have the necessary votes to pass it,” he told reporters.
Sixty votes are needed in the Senate to move the bill toward final passage. Democrats need to retain votes from at least two of the four Republican senators who voted for the bill last month: Scott Brown of Massachusetts, Charles Grassley of Iowa, and Olympia Snowe and Susan Collins of Maine. Democrats could also secure support from Byrd’s replacement and from Senator Maria Cantwell, a Washington Democrat who previously voted against the bill.
Negotiators reopened talks yesterday to eliminate a $19 billion fee on large banks and hedge funds to pay for the bill, a proposal that raised concerns from Brown, Collins and Snowe. The conference committee eliminated the fee and adopted a new financing plan that would end the Troubled Asset Relief Program and increase the level of funds the Federal Deposit Insurance Corp. is required by law to hold in reserves to insure bank customer deposits. The banking industry pays fees to the FDIC to support the fund.
“I appreciate the conference committee revisiting the Wall Street reform bill and removing the $19 billion bank tax,” Brown said today in a statement. “Over the July recess, I will continue to review this important bill.”
Collins said today she’s “inclined to support” the bill.
“This is not the bill that I would have written had I been able to craft it myself, but it’s a balancing test as I decide whether it warrants my support,” Collins told reporters today. “And based on my initial review, I believe that it does.”
Cantwell told reporters today she’s waiting to read the bill language.