The House of Representatives on Wednesday adopted legislation to revamp the nation's financial regulatory system, voting mostly along party lines as partisan acrimony impeded cooperation even on the shared goals of averting economic crises.
The vote in the House was 237-192, with all but three Republicans standing in opposition to a measure that President Barack Obama in his State of the Union speech said embodied one of the highest priorities of his administration: “serious financial reform”. “If this bill were to fail,” said House Speaker Nancy Pelosi, “We would be preserving a status quo that has left our economy in a wretched state”.
Ms. Pelosi gavelled the vote to a close, with 234 Democrats joined by three Republicans in favour and 173 Republicans and 19 Democrats opposed. The Senate is also expected to approve the measure, but majority leader Harry Reid said he would not be able to schedule a vote until after Congress returned from a weeklong recess for the Fourth of July (independence day celebrations).
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Democrats in the Senate need the support of a few Republicans to complete the financial regulatory overhaul, and one of those who supported the Senate version of the bill, Scott Brown, said he wanted to spend the recess reviewing the final language.
The bill gives government regulators the authority to liquidate failing financial companies by breaking them apart, selling assets and forcing creditors and shareholders to take losses so that taxpayers do not pay the bill.
The legislation also vastly expands the regulatory powers of the Federal Reserve and establishes a systemic risk council of high-ranking officials, led by the Treasury Secretary, to detect potential threats to the overall financial system.
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It creates a powerful new consumer financial protection bureau and widens the purview of the Securities and Exchange Commission to broaden regulation of hedge funds and credit rating agencies.
The measure restricts the ability of banks to invest and trade for their own accounts — a provision known as the Volcker Rule, for its proponent, former Fed Chairman Paul A. Volcker — and creates a new regulatory framework for derivatives, the complex financial instruments that were at the heart of the 2008 crisis. — New York Times News Service