Financial reforms win procedural vote in US House
By Kevin Drawbaugh
WASHINGTON, Dec 9 (Reuters) – The U.S. House of Representatives approved a procedural rule on Wednesday that cleared the way for floor debate to begin on legislation that would give the government broad new powers over large financial firms and tighten bank and capital market regulation.
In a 235-177 vote, Democrats pushed through the rule, with only a handful from their own ranks voting in opposition, after settling differences among themselves over more than 200 proposed amendments. All Republicans voting opposed the rule.
President Barack Obama and congressional Democrats see financial regulation reform as crucial to preventing a repeat of last year’s financial crisis and the taxpayer bailouts that followed of companies such as AIG and Citigroup.
On Thursday, lawmakers are expected to propose a flood of amendments to the 1,279-page bill, hammered out over months of discussion and compromise at the committee level.
House leaders hope to bring the measure to a final vote by Friday, before the holiday break. Approval in the House, which analysts widely expect, would throw the financial reform agenda into the Senate where debate will likely go well into 2010.
The bill would set up an inter-agency council to police systemic risk in the economy, while creating new protocols for the government to deal with large, troubled financial firms.
For the first time, it would impose regulation on the free-wheeling over-the-counter derivatives market, including credit default swaps at the root of AIG’s problems.
The insurance industry would for the first time be monitored by a federal office, while a new agency would be formed to protect financial consumers, and hedge funds would be forced to register with federal regulators.
‘WILD WEST’ CITED
“This is about restoring public confidence in a financial system that was allowed to be the Wild West under George Bush and under the Republicans,” said Democratic Representative Ed Perlmutter during debate over the procedural rule.
Republicans have attacked the bill as a measure that would codify bailouts and destroy jobs, while setting up new government bureaucracies and piling costs on businesses.
“This bill creates a perpetual bailout fund and ensures the too-big-to-fail doctrine is with us indefinitely,” said Republican Representative Ed Royce.
An army of lobbyists have fought to block and delay the bill, which would threaten the profits of many firms.
One amendment being pushed by Democratic Representative Walt Minnick would scrap a proposed Consumer Financial Protection Agency (CFPA). Instead it would set up a council of regulators to look after consumers’ interests.
The administration and most Democrats support the proposed CFPA, but it is opposed by banks and other business interests. The U.S. Chamber of Commerce, the nation’s largest business lobbying group, is spending heavily to block the CFPA.
An amendment from Democratic Representative Melissa Bean would give the CFPA more power to preempt state laws that are stricter than the agency’s own limits, a change favored by business, but opposed by consumer advocates.
House Financial Services Committee Chairman Barney Frank wants to amend his own bill to give regulators the power to set margin requirements in over-the-counter derivative transactions involving end users, such as automakers and airlines. (Reporting by Kevin Drawbaugh; editing by Carol Bishopric) ((firstname.lastname@example.org, +1 202 898 8390, +1 202 488 3459 (fax)))