House approves financial overhaul

Brown’s doubts delay Senate vote

By Matt Viser
Globe Staff / July 1, 2010

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WASHINGTON — The House of Representatives overwhelmingly approved a massive restructuring to the nation’s financial laws last night, but the Senate canceled plans to vote on the legislation this week after Senator Scott Brown said he was not ready to pledge support for the measure.

The House, voting 237 to 192, capped an intense, yearlong debate spearheaded by Representative Barney Frank, who was hailed with handshakes, hugs, and applause from Democrats after the vote. The new legislation would bolster consumer protections, create an oversight council, and restrict financial institutions from making some of the risky maneuvers that contributed to the near-collapse of the economy in 2008.

The 10-member Massachusetts delegation all voted in support of the measure, which has been among the top two issues before Congress this year, rivaled only by an overhaul of the health care system. Three Repub licans also supported the bill; when the House passed its initial version last year, no GOP members voted for it.

Senate Democrats had also wanted to pass the bill this week and have it to President Obama before July Fourth, but they ran into several hurdles, including Brown’s reluctance despite repeated attempts to win the Massachusetts Republican’s vote.

“I don’t know what his problem is,’’ Frank, a Newton Democrat and chairman of the House Financial Services Committee, said yesterday.

Senate leaders now hope to hold a vote in about two weeks.

During weeks of negotiations last month to reconcile the House and Senate versions of the bill, several key changes were made to allay Brown’s concerns, including provisions that will allow State Street Corp. and other large banks to continue investing a portion of their money in securities markets.

On Monday, days after leaders thought they had reached a final deal, the 43-member House and Senate conference committee reconvened for two hours to scrap a $19 billion plan to pay for the new regulations because Brown threatened to vote against the bill unless that provision was removed.

The Senate version of the bill, which Brown had voted for six weeks ago, did not include a method of paying for the new regulations. Instead, it would have added to the federal deficit — a spending approach that Brown has opposed in other instances.

Brown said yesterday that he would not make a decision on the final bill for at least another week, after the Senate returns from a weeklong recess.

When Brown joined a handful of Republicans to vote in favor of the Senate version in May, he was heavily criticized by conservative supporters. Some outside observers have speculated that he could be looking for a way to vote against the latest version of the bill, even though negotiators agreed to nearly every one of his requests.

“Heaven and earth was moved for Senator Brown,’’ said Michael Greenberger, former director of trading and markets of the Commodity Futures Trading Commission, who now advises Americans for Financial Reform. “He’s really gotten more than any other member of Congress inserted into this bill. I think there will be a high sense of astonishment if he votes against it.’’

Brown maintained that he needed more time to go over a complicated bill with far-reaching consequences.

“I appreciate the conference committee revisiting the Wall Street reform bill and removing the $19 billion bank tax,’’ Brown said in a statement. “Over the July recess, I will continue to review this important bill. I remain committed to putting in place safeguards to prevent another financial meltdown, ensure that consumers are protected, and that this bill is paid for without new taxes.’’

The legislation, which resembles a plan outlined a year ago by Obama, would seek to curb some of the types of risky trading that led to the economic collapse, increase government tools, and create a bureau within the Federal Reserve to protect consumers from predatory lenders.

Republicans have largely opposed the bill, saying it doesn’t fix some of the problems that contributed to the financial crisis, fails to add enough regulations to the housing industry, and reaches too far into private business operations.

“In total, this bill is a massive intrusion of federal government into the lives of every American,’’ said Representative Spencer Bachus, an Alabama Republican and ranking member on the House Financial Services Committee. “It will move us further toward a managed economy with the federal government making decisions that have been and should stay in the hands of individuals and private businesses.’’

Still, Democrats have been able to muster just enough support for it to pass each step of the way. If the bill is passed by the Senate, several months after health care was approved, it would give Obama and Democrats a major tool to use in the midterm elections.

Yesterday, during a town hall-style meeting in Racine, Wis., Obama criticized House Republican leader John Boehner of Ohio for insinuating the bill was an overreaction and comparing it to “killing an ant with a nuclear weapon.’’

“If the Republican leader is that out of touch with the struggles facing the American people, he should come here to Racine and ask people if they think the financial crisis was an ant,’’ Obama said.

Democrats currently control 58 votes in the Senate, two shy of the 60 they would need to break a Republican filibuster and move the bill toward final passage. Two Democrats have opposed the legislation — Russ Feingold of Wisconsin is still opposed, while Maria Cantwell of Washington says she is still studying the bill — which means Democrats are still three to four votes shy of what they need.

One of those votes is expected to come when West Virginia Governor Joe Manchin, a Democrat, appoints a replacement to fill the Senate seat of Robert Byrd, who died Monday.

But Democrats need to retain at least two of the four Republicans who voted for final passage of the Senate bill last month — Brown; Chuck Grassley of Iowa; and Susan Collins and Olympia Snowe, both of Maine.

Collins said yesterday that “on balance, I am inclined to support it.’’ Snowe and Grassley have not yet said how they plan to vote, although Democrats are optimistic that Snowe will support the bill.

With several other variables, Brown’s vote may not be needed.

“He’s no longer in the critical position,’’ Frank said yesterday of Brown. “It looks as if there are 60 votes without him.’’

Senator Chris Dodd, a Connecticut Democrat and chairman of the Senate Banking Committee, said that he was confident the bill would end up passing.

“Look, I’m trying to be patient with people,’’ he said. “It’s a big bill, a lot of work has gone into it. . . . I’m still very optimistic that we will have the necessary votes to pass this bill.’’

Matt Viser can be reached at

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