Centrist, Conservative Democrats delay financial reform debate

A group of centrist and conservative House Democrats forced a last-minute delay of a sweeping financial regulatory reform package scheduled for debate on the House floor Wednesday, sparking a flurry of negotiations before a compromise cleared the way for the legislation to move forward.

The key point of contention was a proposed amendment by Rep. Melissa Bean (D-Ill.), vice chair of a centrist coalition called New Democrats, that some party members were pushing to have considered on the House floor. Bean's amendment, a version of which was defeated in committee, would allow federal laws governing consumer protection to preempt those set by individual states.

The bill passed by Rep. Barney Frank's committee would allow states in most cases to impose tougher restrictions, using federal standards as a floor rather than a ceiling. The financial industry has lobbied furiously against that approach, arguing that such a structure would add layers of burdensome bureaucracy and confuse consumers.

Also at issue was an amendment by Rep. Walt Minnick (D-Idaho), a member of the moderate Blue Dog Democrats. Minnick's measure, also defeated during a committee vote, would eliminate the new independent Consumer Financial Protection Agency supported by Frank and the Obama administration and replace it with a council of existing regulators to oversee consumer protection.

Republicans have been unified in their opposition to the proposed new consumer agency, as well as other elements of the financial reform bill. Therefore, Wednesday's threat by some Democrats to vote against the bill was significant, as Frank needs as many Democratic votes as possible to ensure passage of the legislation.

Frank met late Wednesday afternoon with House Speaker Nancy Pelosi (D-Calif.) and other Democrats, as well as representatives from the Treasury Department, to try to resolve the standoff. Afterward, Bean and Frank said a deal had been reached that would allow the bill to move forward.

"The differences have been narrowed," Frank said.

Several people familiar with the negotiations said the Bean and Minnick measures were likely to get a vote, though possibly in a modified form. Frank has said he hopes to hold a final vote on the package by week's end.

Staff writer Perry Bacon contributed to this report.