The House of Representatives approved what’s likely to be the final version of financial reform yesterday, on a mostly party-line vote of 237 to 192 (roll call). Iowa Democrats Bruce Braley (IA-01), Dave Loebsack (IA-02) and Leonard Boswell (IA-03) voted for the compromise that emerged from a House-Senate conference committee. They had also voted for the original House version last December. Republicans Tom Latham (IA-04) and Steve King (IA-05) voted against the new regulations on the financial sector. The Senate will take up this bill after senators return from the July 4 recess on July 12.
I haven’t blogged much about financial reform because so many important provisions didn’t make it into the original House bill and/or were ditched during the Senate amendment process. Yesterday Democratic Senator Russ Feingold of Wisconsin blasted the “unholy alliance between Washington and Wall Street”:
I cosponsored a number of critical amendments during Senate consideration of the bill including a Cantwell-McCain amendment to restore Glass-Steagall safeguards, Senator Dorgan’s amendment that addressed the problem of “too big to fail” financial institutions, and another “too big to fail” reform offered by Senators Brown and Kaufman that proposed strict limits on the size of those institutions. Each of those amendments would have improved the bill significantly, and each of them either failed or was blocked from even getting a vote.
After that, it wasn’t a close call for me. It would be a huge mistake to pass a bill that purports to re-regulate the financial industry but is simply too weak to protect people from the recklessness of Wall Street. […]
Since the Senate bill passed, I have had a number of conversations with key members of the administration, Senate leadership and the conference committee that drafted the final bill. Unfortunately, not once has anyone suggested in those conversations the possibility of strengthening the bill to address my concerns and win my support. People want my vote, but they want it for a bill that, while including some positive provisions, has Wall Street’s fingerprints all over it.
In fact, reports indicate that the administration and conference leaders have gone to significant lengths to avoid making the bill stronger. Rather than discussing with me ways to strengthen the bill, for example, they chose to eliminate a levy that was to be imposed on the largest banks and hedge funds in order to obtain the vote of members who prefer a weaker bill. Nothing could be more revealing of the true position of those who are crafting this legislation. They had a choice between pursuing a weaker bill or a stronger one.
This week, Democrats sought to confirm the support of Sen. Scott Brown (R) of Massachusetts, who threatened to vote against the bill if it contained $19 billion in new fees on large banks and hedge funds. House and Senate conferees reconvened to remove that provision, but on Wednesday Senator Brown didn’t commit his vote. He said he plans to evaluate the bill over Congress’s week-long July 4 recess.
During the past few weeks David Waldman wrote an excellent series of posts on the conference process and mechanics. Political junkies should take a look, because this won’t be the last important bill hammered out by a conference committee.
As with health insurance reform, the Wall Street reform bill contains a bunch of good provisions. Chris Bowers lists many of them here. Representatives Braley, Loebsack and Boswell also highlighted steps forward in statements I have posted after the jump. On balance, it’s better for this bill to pass than for nothing to pass. But like health insurance reform, the Wall Street reform bill isn’t going to solve the big systemic problems it was supposed to solve. It’s disappointing that large Democratic majorities in Congress couldn’t produce a better bill than this one, and it’s yet another sign we need filibuster reform in the Senate.
Share any relevant thoughts in this thread.
Statement from Representative Bruce Braley, June 30:
Washington, DC – Congressman Bruce Braley (D-Iowa) voted today to pass the Restoring American Financial Stability Act of 2010 (HR 4173), the strongest set of financial reforms since legislation passed in response to the Great Depression. The bill includes strengthened consumer protections, ends the practice of “Too Big to Fail” and expands regulation of reckless Wall Street speculation.
“After reckless Wall Street speculators devastated our economy and wiped out retirement funds on Main Street, I’m proud to have taken this important vote to pass the strongest financial reforms since the 1930s,” Braley said. “This bill creates transparency and accountability for an out-of-control financial system and finally moves America’s middle class families toward a level playing field with big banks and Wall Street investors.”
The bill includes key consumer protections that will help protect American families and small businesses from risky Wall Street gambles by:
Establishing a new independent watchdog agency with the authority to:
ensure American consumers get the clear, accurate information they need to shop for mortgages, credit cards, student loans, and other financial products, and
protect them from hidden fees, abusive terms, unfair terms and deceptive practices.
Reforming mortgage lending eliminating many of the hidden fees and abusive practices that trapped so many families with loans they could not afford to repay, and that resulted in record foreclosures.
· Allowing consumers free access to their credit score if their score negatively affects them in a financial transaction or a hiring decision.
Statement from Representative Dave Loebsack, June 30:
WASHINGTON , DC – Today, Congressman Dave Loebsack voted to rein in Wall Street, end taxpayer bailouts of big banks, and protect consumers from abusive practices. The Dodd-Frank Wall Street Reform and Consumer Protection Act will end the era of abuses by “too big to fail” banks that have cost the American people 8 million jobs and $17 trillion in retirement savings and net worth.
“This bill sends a clear message to Wall Street – clean up your act,” said Loebsack. “This bill seeks to end practices of a financial industry run amok with predatory lending and reckless gambling with hardworking American’s money. By establishing practices that prevent costly taxpayer-funded bailouts, and putting the financial industry in charge of paying for their own mistakes – we are taking one of the most vital steps towards protecting Iowa families, small businesses, and our economy.”
The Wall Street Reform and Consumer Protection Act includes the following provisions:
· Ends “too big to fail” by creating a process to shut down large, failing firms whose collapse would put the entire economy at risk. After the company’s assets are used, additional costs would be covered by a “dissolution fund.” All large financial firms would contribute to this fund.
· Creates a consumer watchdog that will be devoted to protecting Americans from unfair and abusive financial practices of large institutions. The watchdog will provide clear and accurate information to families and small businesses to ensure that financial products like mortgages, and credit cards are fair and affordable.
· Enforces tough oversight with more enforcement power and funding for the Securities and Exchange Commission, including requiring registration of hedge funds and private equity funds and enhanced oversight and transparency for credit rating agencies, whose seal of approval gave way to excessively risky practices that led to a financial collapse.
· Establishes new rules on the riskiest financial practices that gambled with your money and caused the financial crash, like the credit default swaps that devastated AIG, and common sense regulation of derivatives and other complex financial products. Includes a strong “Volcker rule” that generally restricts large financial firms with commercial banking operations from trading in speculative investments.
· Audits the Federal Reserve’s emergency lending programs from the financial crisis and limits the Fed’s emergency lending authority.
· Reins in egregious executive compensation and retirement plans by allowing a ‘say on pay’ for shareholders, requiring independent directors on compensation committees, and limiting bank executive risky pay practices that jeopardize banks’ safety and soundness.
The bill has been called the “strongest set of Wall Street reforms in three generations” by Elizabeth Warren, Chair of the nonpartisan Congressional Oversight Panel, and has been endorsed by the AARP, Consumer Federation of America, Consumers Union, Council of Institutional Investors, National Fair Housing Alliance, National Restaurant Association, Public Citizen, SEIU, and US PIRG, among other organizations. The bill was publicly debated for more than 50 hours, and includes over 70 Republican and bipartisan amendments.
Statement from Representative Leonard Boswell, June 30:
Washington, DC – Today, Congressman Leonard Boswell voted to hold Wall Street and big banks accountable for the economic meltdown of 2008 and to protect the pocketbooks of Iowa’s families and small businesses when the House passed the conference report for H.R. 4173, the Wall Street Reform and Consumer Protection Act.
“Congress, the President, and the American taxpayers were forced to make tough choices in 2008 to bring the economy back from the brink of failure after eight years of deregulation and gambling on Wall Street finally caught up with us,” Boswell said. “As part of the conference committee on H.R. 4173, I worked for Iowa’s Main Street to pass regulations that will deter bank executives from excessive risk-taking and hold them accountable for their actions. This legislation ends taxpayer-funded bailouts, protects families’ investments and small businesses’ financial futures, ends predatory lending practices and ‘too-big-to-fail’ firms, and injects transparency and accountability into the financial system by regulating the derivatives market.”
Boswell served on the conference committee as Chairman of the Subcommittee on General Farm Commodities and Risk Management which oversees the U.S. Commodity Futures Trading Commission.
“While crafting this legislation in conference committee, I used the experience and knowledge that I have gained as Chairman of the General Farm Commodities and Risk Management Committee and my personal history in agriculture to place myself in the shoes of a commercial end-user,” Boswell said. “I understand that farmers and producers depend on the markets to manage risk and run their operations effectively. H.R. 4173 protects the interests of Iowa’s agriculture community who legitimately use these markets to hedge operations costs and lock-in commodity prices by regulating the financial players who manipulate these markets recklessly and seemingly, for sport.”