The House on Wednesday passed legislation, blocked by Democrats last week, that would delay the implementation of a controversial provision in the 2010 Dodd-Frank Wall Street reform law. Passage fell largely along party lines by a vote of 271-154. Twenty-nine Democrats joined all but one Republican in support.
The measure had first hit the House floor last week, on the second day of the new Congress, under a fast-track procedure typically reserved for noncontroversial bills that requires a two-thirds majority for passage. But Democrats prevented it from reaching a two-thirds majority, limiting its support to a vote of 276-146. The legislation came to the floor Wednesday under a procedure requiring only a simple majority, ensuring its passage.
The bill, which the White House is threatening to veto, would delay implementation of Dodd-Frank’s “Volcker rule” until 2019, rather than 2017 as originally planned. The Volcker Rule, named after former Federal Reserve Chairman Paul Volcker, requires big banks to sell-off financial investments known as collateralized loan obligations (CLOs).
Progressives argue that CLOs are a risky form of financing that, if left unregulated, could lead to another financial collapse. But centrist Democrats and Republicans say CLOs are an important way for small and big businesses alike to obtain financing during a sluggish economic recovery.
Twenty-nine House Democrats supported the bill, bucking the White House and progressive leaders including Sen. Elizabeth Warren (D-Mass.) and House Minority Leader Nancy Pelosi (D-Calif.), who were working to keep Democrats in opposing the bill.
The package is comprised of 11 bills previously considered in the last Congress. Some parts are relatively uncontroversial, such as allowing the Securities and Exchange Commission to establish a pilot program allowing certain companies to increase the minimum price variation their securities can be quoted.
House Financial Services Committee Chairman Jeb Hensarling (R-Texas) accused Democrats of previously supporting the bills tucked into the package and suddenly opposing them for political gain. “The bills that are rolled up to ensure greater capital formation and regulatory relief for our smaller business enterprises, all of these passed either the committee or the House with overwhelming bipartisan support. And now the minority is coming to this floor and somehow crying foul,” Hensarling said.
Rep. Maxine Waters (D-Calif.), the top Democrat on the House Financial Services Committee, argued Republicans tried to “sneak” the measure through the House at the whims of big banks. “If at first you don’t succeed, try, try again. Usually we tell that saying to children to encourage them to achieve greater things. But it seems that when it comes to Congress, it’s what Wall Street keeps telling House Republicans,” Waters said.
Last Congress, the House Financial Services Committee approved a more stringent CLO bill with bipartisan support on a 53-3 vote in January 2014, including with support from Waters. All three “no” votes were cast by Democrats.
Democrats who voted in favor of Wednesday’s legislation comprised a coalition of centrists and lawmakers with ties to Wall Street, like Rep. Jim Himes (D-Conn.), a former Goldman Sachs banker.
The 29 Democrats were Reps. Brad Ashford (Neb.), Ami Bera (Calif.), Don Beyer (Va.), Sanford Bishop (Ga.), Julia Brownley (Calif.), Cheri Bustos (Ill.), John Carney (Del.), Gerry Connolly (Va.), Henry Cuellar (Texas), John Delaney (Md.), Bill Foster (Ill.), Gwen Graham (Fla.), Brian Higgins (N.Y.), Himes, Derek Kilmer (Wash.), Ron Kind (Wis.), Rick Larsen (Wash.), Dan Lipinski (Ill.), Sean Patrick Maloney (N.Y.), Patrick Murphy (Fla.), Scott Peters (Calif.), Jared Polis (Colo.), Mike Quigley (Ill.), Raul Ruiz (Calif.), Kurt Schrader (Ore.), David Scott (Ga.), Terri Sewell (Ala.), Kyrsten Sinema (Ariz.) and Albio Sires (N.J.).