By DAVID GROVES
WASHINGTON, D.C. (Jan. 8, 2015) — On the second day of Congress’s new session, Republicans who have strengthened their control the U.S. House of Representatives lost a bid to quickly pass legislation that would relax requirements under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act approved in the wake of the Great Recession.
Although Wednesday’s vote was 276-146, the package failed because Republican leaders used a voting procedure usually reserved for non-controversial measures that requires two-thirds support, or 289 votes, for passage. Among the 35 Democrats who crossed party lines and voted with the GOP to approve H.R. 37 were Reps. Suzan DelBene, Derek Kilmer and Rick Larsen of Washington state. The rest of Washington’s Democratic delegation voted against the bill. All four Republicans from the state voted “yes.”
Minority Leader Nancy Pelosi (D-Calif.) had urged Democrats to oppose the measure, which was not subject to amendment, calling it “an 11-bill Wall Street wish list.” Following the vote, she released a statement saying she “was proud Democrats had stood together to protect critical Wall Street reforms.”
The Dodd-Frank law’s Volcker Rule bans banks from speculating in securities markets with taxpayer funds and requires banks to sell their investments in risky collateralized loan obligations, which are securitized pools of commercial and corporate debt. That provision’s effective date is July 2017, but Wall Street lobbyists have been fighting to have it repealed, or at least delayed. The legislation that failed to pass on Wednesday would have, among other things, granted a two-year reprieve and allowed banks to hang onto those risky CLO holdings until July 2019.
A Huffington Post report called the vote “a major test of the Democratic Party’s willingness to fight financial deregulation:”
In December, Congress passed a $1.1 trillion budget bill that included subsidies for risky derivatives trades, the complex contracts at the heart of the 2008 meltdown. Pelosi, Rep. Maxine Waters (D-Calif.) and Sen. Elizabeth Warren (D-Mass.) had organized resistance to that legislation, only to be narrowly outgunned by personal lobbying late into the night from President Barack Obama and JPMorgan Chase CEO Jamie Dimon.
The fact that a bill to postpone a major part of the Volcker Rule was being considered at all showed the confidence of bank lobbyists just weeks after being hit with a barrage of negative press coverage over the derivatives measure.
All three Washington Democrats who voted Wednesday for H.R. 37 have reiterated their strong support for the Dodd-Frank law.
“I’m a strong supporter of Dodd-Frank and of financial regulations that protect consumers,” said Rep. Kilmer:
There are folks leading Congress right now that want to repeal Dodd-Frank. They are wrong and I oppose them. But where there are common sense tweaks that can be made that represent legitimate reform, I think we should be willing to consider that. For example, today’s bill included a bill that passed in 2013 by a vote of 420-2 to prevent foreign jurisdictions from retaliating against U.S. companies. I fear we undermine common sense regulation and fuel those who want to repeal the whole thing if we treat this law as something written on stone tablets.
Many Democrats opposed this bill because of the procedural concern that it hadn’t gotten a thorough hearing in this Congress since this is just the second day. I appreciate that concern despite the fact that a bill that was very similar was passed out of the House in September with strong bipartisan support.
“Congresswoman DelBene strongly supports Dodd-Frank and opposes attempts to repeal it, which is why she voted against the ‘Cromnibus’ at the end of last year because it included a provision that re-opened the door for taxpayer-funded bailouts of Wall Street,” said Ramsey Cox, DelBene’s Communications Director. “While the legislation voted on yesterday wasn’t perfect, it did contain a number of common sense fixes that landmark legislation often requires.”
The White House had indicated before the vote that the president opposed H.R. 37 and would have vetoed it had it reached his desk.
“We are opposed to this legislation and pleased that it did not pass,” White House spokeswoman Jennifer Friedmann said in a statement. “The President has been clear about his opposition to legislation that would weaken key consumer protections and provisions of the Dodd-Frank Wall Street Reform Act.”
Republican leaders are vowing to bring the legislation back for a second vote that will require just a simple majority for approval.