The House passed the most ambitious restructuring of federal financial regulations since the New Deal on Friday, aiming to head off any replay of last year's Wall Street failures that plunged the nation deep into recession.
The sprawling legislation would give the government new powers to break up companies that threaten the economy, create a new agency to oversee consumer banking transactions and shine a light into shadow financial markets that have escaped the oversight of regulators.
The vote was a party-line 223-202. No Republicans voted for the bill; 27 Democrats voted against it.
While a victory for the administration, the legislation dilutes some of President Barack Obama's recommendations, carving out exceptions to some of its toughest provisions. The burden now shifts to the Senate, which is not expected to act on its version of a regulatory overhaul until early next year.
The president praised the House action Friday, and called on Congress to act swiftly to get the bill to the White House for his signature.
"The crisis from which we are still recovering was born not only of failure on Wall Street, but also in Washington," Obama said. "We have a responsibility to learn from it and to put in place reforms that will promote sound investment, encourage real competition and innovation and prevent such a crisis from ever happening again. "
The legislation would govern the simplest payday loan and the most complicated high-finance trades. In its breadth, the measure seeks to impose restrictions on every house of finance, from two-teller neighborhood thrifts to huge interconnected conglomerates.
Democratic leaders had to fend off a last-minute attempt to kill a proposed consumer agency, a central element of the legislation and one the features pushed by the White House. The agency would take over consumer protection powers from current banking regulators, and big banks and the U.S. Chamber of Commerce vigorously opposed the idea.
Democrats said the broad legislation would help address problems that led to last year's calamitous financial crisis. Republicans argued that it overreached and would institutionalize bailouts for the financial industry.
"Let's put it to the American people: Do you prefer the Republican position of doing literally nothing to rein in these abuses or should we try to rein them in?" Rep. Barney Frank, who led the Democratic effort on the bill, asked moments before the final vote.
Republicans cast the regulatory bill as a burden to business and argued that it would continue to protect companies considered too big to fail. They offered an alternative that called for special bankruptcy proceedings to dismantle failing financial institutions. That alternative failed.
"This house has been on a spending spree, a bailout spree and a regulatory spree that I could never have imagined in any of my prior 18 years here in Congress," Republican Leader John Boehner of Ohio said.
Democrats accused Republicans of doing the bidding of big banks, pointing to a meeting in the Capitol Visitors' Center this week between GOP leaders and about 100 lobbyists. Even the White House took a swipe at House Republicans.
"I didn't expect them to help after a meeting with 100 lobbyists for the financial industry," White House Chief of Staff Rahm Emanuel said in an interview. "I'm not surprised they are opposed to it. The lobbyists are trying to gut this."
Consumer advocates cheered the survival of the consumer protection agency but said the overall legislation fell short, especially in the regulation of complex investment instruments known as derivatives.
Now... even though the Senate won't pick this up 'till early next year, I see this as a major victory for Democrats for several reasons....
1) As a gloating liberal posted in commentary, this bill was passed despite bi-partisan opposition. If nothing else, this vote gives hope to the Democrats, who now know that significant legislation can be passed against conservative-to-moderate opposition (healthcare anyone?).
2) The age-old perception that the GOP is in bed with the worst abuses of the free market system has now been confirmed to the American people. If the GOP was trying to convince people that they held the interests of average struggling Americans over the greedy American banks, then they failed spectacularly.
3) As everyone knows, if there's one thing that the average consumer would say to boost their bottom line and confidence in the economy, they would say "get these fucking banks and credit card companies OFF MY BACK! Make them treat us fairly. Make them stop charging us $35 when we go one cup of coffee over our limit. Make them play by the rules!"
The GOP had a chance to be a part of that - to stand up for American consumers - and blew it bigtime.
4) Whatever momentum the GOP had towards 2010 is now stalled. Too bad for the country. Obama and the left will utterly destroy us if we let them, and we've given them a great opening, thanks to the GOP's achilles' heel: its uncritical support for "free market" finance that everyone knows is RIGGED.
I dunno... maybe the liberals are right... maybe the GOP is incapable of extricating itself from the hip-pockets of the financial industry.
Look... I'm a Republican and a conservative (just in case the tone of this blog wasn't clear). A great Republican once said "The constitution is not a suicide pact" - and I believe that one's financial philosophy shouldn't be one either.
I am all in favor of companies making a fair return on their investment, and I am leary of all of Obama's schemes... but COME ON! These bankers are CROOKS! The abuses of banks and credit card companies are well documented. They are nothing less than financial rapists and the way they have conducted themselves in this tough economic time towards their own customers can only be described as profoundly evil.
This is one case - I am sad to say - where the Democrats are on the right side.
It makes me angry when so many conservatives spout on about "personal responsibility" (which I'm all for btw) but can't see criminality for what it is. It's one of the main reasons - if not the main reason - why so many people don't take us Republicans seriously. And why should they... we are standing up for criminals.
And, as you know, I do not stand up for criminals - whether they are wearing doo-rags or pinstripes. A crook is a crook.
This isn't about (the all too usual) creeping Socialism of the Obama-ites; this whole thing came about because of people on Wall Street consumed with sheer greed and a political party that refuses to be less than dogmatic on the issue of finance. If the industry had taken even the slightest measures to address the overwhelming tide of seething hatred (deservedly) flowing their way, they might have avoided this. But pure greed knows no limits.
The industry richly deserves any and all limits put against it.