House approves Wall Street reform

Democratic efforts to overhaul Wall Street inched closer to the finish line on Wednesday as the House approved the legislation and a key Senate Republican announced her support.

The House approved the conference report in a 237-192 vote. Nineteen Democrats voted against the measure, while three Republicans voted for it. No Republicans voted for the House version of the bill. 

The three Republicans who voted for the measure were Rep. Mike Castle (R-Del.), who is running for the Senate; Rep. Joseph Cao (R-La.), one of the most vulnerable Republicans in Congress; and Rep. Walter Jones (R-N.C.).

Many of the Democrats who voted against the measure face tough reelection fights this year or are in districts that lean Republican. They included Reps. Rick Boucher (Va.), Bobby Bright (Ala.), Travis Childers (Miss.), Mark Critz (Pa.), Tom Perriello (Va.) and Ike Skelton (Mo.).

Earlier in the day, Sen. Susan Collins (R-Maine) said she would vote for the conference report after House and Senate negotiators reconvened late Tuesday to remove up to $19 billion in new fees on large financial firms.

Still, Senate Democrats said they would need to delay a final vote on the 2,300-page bill until after the July 4 recess. The party has yet to clinch the 60 votes necessary to overcome procedural hurdles, with a handful of crucial Democratic and Republican senators yet to announce how they will vote.

The legislation aims to prevent future taxpayer-funded bailouts; boost regulation over credit cards, mortgages and other products; regulate the $600 trillion derivatives market; and increase oversight of broad financial system risks, among other measures.

Republicans continued to criticize the legislation, arguing that it doesn’t do enough to end the problem of firms that are viewed as “too big to fail,” and remains silent on regulation of Fannie Mae and Freddie Mac, the two mortgage giants taken over by the government in 2008. They argue it will hurt the economy by costing jobs through the contraction of credit.

“In total, this bill is a massive intrusion of federal government into the lives of every American,” said Rep. Spencer Bachus (R-Ala.). “It is the financial services equivalent of Obamacare, the government takeover of the healthcare system.”

Democrats went on the attack on Wednesday, criticizing House Republican Leader John Boehner’s (R-Ohio) comments in a Pittsburgh newspaper interview that compared the legislation with “killing an ant with a nuclear weapon.” Obama took aim at the remark, saying on a trip to Racine, Wis.: “He compared the financial crisis to an ant. The same financial crisis that led to the loss of nearly eight million jobs.”

Senate Democrats continued Wednesday to shore up support for the bill.

Sen. Russ Feingold (D-Wis.) remains opposed to the bill, and Sen. Maria Cantwell (D-Wash.), who was opposed in May, said Wednesday she is still reviewing the legislation. Democrats are also short another vote in support because of Sen. Robert Byrd’s (D-W.Va.) death; his replacement will be named by the state’s Democratic governor.

Collins and Republican Sens. Scott Brown (Mass.) and Olympia Snowe (Maine) had raised concerns about the $19 billion in fees. Brown said Wednesday he would continue to review the legislation during the recess. The three Republicans were central to Senate passage of an earlier version of the legislation in May.

The new version of the bill pays for the overhaul with unused money from the $700 billion financial bailout and changes to the government’s fund for deposit insurance. The deposit insurance fund change will exempt banks with $10 billion or less in assets.

The earlier form of the bill would have raised fees on financial companies with at least $50 billion in assets and hedge funds with at least $10 billion in assets under management. Federal regulators would have had to spell out the specifics of the fees, but hedge funds and insurers were alarmed by the possibility that they needed to front the costs of the bill.

The American Insurance Association (AIA) and National Association of Mutual Insurance Companies (NAMIC) praised the change. ““This fee would have unfairly included some property/casualty insurers in a pre-funding mechanism to fix problems that our industry did not cause, burdening insurers and their customers with the costs of the bill,” said Jimi Grande, NAMIC’s senior vice president.

The fees could have hit nearly 30 large hedge funds. There are 29 U.S.-based hedge funds that manage at least $10 billion in assets, according to Hedge Fund Research, an industry research firm. Those firms represent a combined $517 billion in assets, or roughly one-third of the $1.67 trillion in total industry assets, according to the firm.