WASHINGTON – The House on Wednesday approved the most sweeping rewrite of financial rules since the Great Depression, and last-minute changes this week appeared to solidify support in the Senate and pave the way for the legislation to reach the White House later this month.
Complications prevented a Senate vote this week, meaning Congress will not meet President Barack Obama’s July 4 deadline for signing his top legislative priority.
The 237-192 House vote split sharply along partisan lines. Only three Republicans voted for the bill – Anh “Joseph” Cao of Louisiana, Michael N. Castle of Delaware and Walter B. Jones of North Carolina. Nineteen Democrats voted against it.
Democrats charged in often-contentious debate that Republicans were protecting Wall Street from tough new regulations designed to prevent a repeat of the financial crisis and end the prospect of future government bailouts.
But Republicans said the legislation was a dangerous expansion of government power that would restrict access to credit by consumers and businesses. They blasted it for failing to address the future of seized housing giants Fannie Mae and Freddie Mac and warned that the legislation would lead to more bailouts through a controversial new federal authority to seize and dismantle large financial firms on the brink of bankruptcy should their failure seriously damage the economy.
Obama and Democratic congressional leaders pushed hard to enact the regulatory overhaul before lawmakers leave for their weeklong Fourth of July recess. But the death of Sen. Robert C. Byrd, D-W.Va., and concerns raised by the bill’s few Republican supporters in the Senate forced a delay in a vote there until lawmakers return in mid-July.
A hastily agreed-to revision Tuesday to remove a controversial $19 billion fee on large banks and hedge funds appeared to clear the way for senators to approve the bill shortly after they return to Washington on July 12, when Byrd’s replacement should be seated.
The changes were made to address concerns by three Senate Republicans whose votes are needed for passage – Scott Brown of Massachusetts and Susan Collins and Olympia J. Snowe of Maine.
Brown said he would not vote for the bill with the $19 billion fee, a surprise addition early last Friday as congressional negotiators finished reconciling Senate and House versions. Collins and Snowe also expressed concerns about the fee.
Members of a joint House and Senate conference committee reconvened Tuesday and removed the fee. They replaced it with two complicated accounting moves, offsetting the costs through savings from ending the $700 billion Troubled Asset Relief Program bailout fund about three months early and increasing the premium charged to banks for federal deposit insurance coverage.
The far-reaching 2,323-page bill would overhaul the nation’s financial regulatory system.
In addition to new powers to deal with huge companies on the brink of bankruptcy – designed to prevent a repeat of the 2008 failure of investment banking firm Lehman Bros. and the rescue of giant insurer American International Group Inc. – the legislation makes several other major changes and scores of smaller ones.
It would create a bureau within the Federal Reserve to protect consumers in the financial marketplace, impose tough regulations on complex financial derivatives, establish a council of regulators to monitor the financial system for major risks and grant shareholders a nonbinding vote on executive compensation.