House votes 223 to 202 to approve sweeping bill to overhaul financial regulatory system
Saturday, December 12, 2009
More than a year after the near-collapse of Wall Street plunged the economy into crisis, a divided House on Friday approved the most sweeping overhaul of the nation's financial regulatory system since the Great Depression.
"We are sending a clear message to Wall Street: The party is over," House Speaker Nancy Pelosi said after the 223 to 202 tally, which failed to attract a single Republican vote.
The bill's passage marks a milestone in the Obama administration's efforts to rein in the abuses that contributed to the crisis and to prevent similar failures in the future. President Obama has called financial reform one of his top priorities, alongside health care and climate change. In a statement Friday, he said the legislation "brings us another important step closer to necessary, comprehensive financial reform," and he urged the Senate to act as quickly as possible.
The 1,279-page House bill would create a new federal agency dedicated to consumer protection, establish a council of regulators to police the financial landscape for systemic risks, initiate oversight of the vast derivatives market and give the government power to wind down large, troubled firms whose collapse could endanger the entire financial system. The legislation also would give shareholders an advisory say on executive compensation, increase transparency of credit-ratings agencies and set aside billions of dollars to aid unemployed homeowners.
Rep. Barney Frank (D-Mass.), who guided the bill through the House Financial Services Committee, compared the legislation to efforts in previous generations to expand the government's oversight of private enterprise.
"Innovation is generally a good thing. But in the absence of sensible regulation, it can cause abuses," he said. "And so I think this is, frankly, of the historic dimensions of what Theodore Roosevelt and Woodrow Wilson did, and what Franklin Roosevelt did."
House Republicans were unanimous in their opposition, saying that the bill would amount to an egregious overreach of government powers and leave unresolved many of the problems that led to the recent crisis. They argue that it would create unnecessary new layers of bureaucracy and stifle financial innovation.
"We are left with a perpetual Wall Street bailout bill," Rep. Jeb Hensarling (R-Tex.), an outspoken critic, said during Friday's debate. "We are left with a bill that will crush job creation at a time when our nation needs to be creating jobs. We have a bill that assaults the fundamental economic liberties of every American citizen."
Despite Friday's victory for administration officials, the elation won't last long. An uncertain road lies ahead in the Senate, where success requires a three-fifths majority and where support from key Democrats is far from certain.
Vision for reform
"We did not choose how this crisis began, but we do have a choice in the legacy this crisis leaves behind," President Obama said June 17, as his administration unveiled an 85-page white paper that laid out its vision for financial reform. From there, Frank steered versions of that blueprint through the House Financial Services Committee as lobbyists of all stripes descended on lawmakers in a furious effort to shape the outcome.
Consumer advocates pushed for more rigorous regulation, saying that the institutions responsible for wrecking the economy need strict supervision. Financial and business groups mounted multimillion-dollar attacks on the proposed consumer-protection agency and other parts of the bill, arguing that too much regulation could strangle both large and small firms.
The summer passed in a flurry of press releases and public statements, conference calls and letter-writing operations. There were rallies and protests, closed-door meetings and shoe-leather lobbying in the marble hallways of Congress. The U.S. Chamber of Commerce produced ads claiming that a new consumer agency would crack down on local butchers and bakers.