The House passed a bill Wednesday to ease the landmark law reining in banks and Wall Street, advancing a key Republican priority more than six years after a financial crisis brought on the Great Recession.
The vote was 271-154 on legislation pushed by the newly bulked-up Republican majority in the House. Approval of the bill came swiftly in the second week of the new Congress despite a veto threat from the Obama White House. The measure now goes to the Senate, where it will likely pass despite strong opposition from liberal Democrats like Sen. Elizabeth Warren.
The bill alters sections of the 2010 Dodd-Frank financial overhaul. That law had tightened government oversight of banks and financial markets with an eye toward preventing another crisis and taxpayer bailout of banks. At the height of the financial crisis in late 2008, the government stepped in to rescue crippled banks -- including the largest Wall Street institutions -- with hundreds of billions of dollars in taxpayer money.
Most notably, the measure passed Wednesday would give U.S. banks two extra years -- until 2019 -- to ensure that their holdings of certain complex and risky securities don't put them out of compliance with a new banking rule.
With the Republican push, the legislation in the House bypassed the customary legislative slog of committee work and revisions. It wouldn't appear likely to sail through the Senate nearly as quickly. While the Republicans now control the Senate as a result of November's elections, GOP senators would be more likely to work on compromises with their Democratic colleagues and to put the legislation through a process of hearings and debate.
In debate Tuesday night, Democratic lawmakers denounced the move as a giveaway to the largest U.S. banks, which hold the bulk of the securities in question.
Rep. Maxine Waters of California, senior Democrat on the House Financial Services Committee, called it "this gift to a handful of the biggest Wall Street banks."
The bill's author, Rep. Michael Fitzpatrick, R-Pa., insisted it makes "smart, technical reforms." It would have the effect of "reining in out-of-control Washington regulators" and helping small businesses create jobs by reducing their compliance burden, he said.
The Democrats objected to the measure being whisked through the House in the first days of the new Congress without an opportunity for discussion or changes at the committee level. But they were thwarted late Monday in their attempt to bring about a dozen amendments to a floor vote.
Republicans insisted that because most of the provisions of the bill already had been voted on by the House in the last Congress as separate measures, ample opportunity was provided to consider them.
The bill would revise the so-called Volcker rule, a key part of the financial overhaul law, which would limit banks' riskiest trading bets. That kind of risk-taking on Wall Street helped trigger the 2008 crisis.
The bill won a 276-146 majority in the House a week ago -- only the second day of the new Congress -- but failed under fast-track rules that required a two-thirds vote.
Republicans in the House have been trying for years to chip away at the Dodd-Frank law, which Congress enacted with mostly Democratic support to tighten regulation. The aim was to prevent another crisis. Republicans have denounced the law as an excessive expansion of regulatory authority that's stifling the competitiveness of the financial industry.
The Obama White House issued a veto threat Monday, saying the bill "would weaken and undermine" the Dodd-Frank law. Referring to the proposed two-year delay for certain securities under the Volcker rule, the White House said in a statement, "taxpayers should not have to wait that long to have limits in place that protect them from risky practices."
The Federal Reserve in April gave banks until July 2017 to sell off their holdings of so-called collateralized loan obligations, which are mainly backed by commercial loans to higher-risk companies. That came atop a previous one-year extension by the Federal Reserve, to July 2015.
The rule is named for Paul Volcker, a former Federal Reserve Board chairman who was an adviser to President Barack Obama during the financial crisis. Volcker urged a ban on high-risk trading by big banks to diminish the likelihood that taxpayers might have to rescue them again.