WASHINGTON (AP) — A sweeping overhaul of financial regulations aimed at preventing another economic crisis headed Wednesday for a final House vote after Democrats backed down on a $19 billion tax they had added on big banks and hedge funds.
The Senate, its votes still in flux, planned to take up the bill in mid-July, denying President Barack Obama a victory before Independence Day. Democrats struggled to secure a handful of Republican Senate votes, even after backing down on the tax.
The far-reaching legislation would rewrite the nation’s regulatory books and reach from storefront thrifts to the high-finance penthouses of Manhattan. Simple supermarket purchases and exotic derivatives trades would be subject to new restrictions. And the entire financial system would be placed on a risk watch in hopes of catching the next threat.
The House vote was destined to break along party lines, following a pattern set last December when no Republicans voted for the House version of the bill. The new legislation combines the House bill with one passed by the Senate last month.
WATCH MSNBC COVERAGE OF FINANCIAL REFORM:
[MSNBCMSN video=”http://www.msnbc.msn.com/id/32545640″ w=”592″ h=”346″ launch_id=”38016507^280^200580″ id=”msnbc79937b”]
“The era of no regulation is over, status quo doesn’t work,” declared Rep. Melissa Bean, D-Ill. “It’s time to act and protect the American people.”
Republicans portrayed the bill as a vast overreach of government power that would do little to prevent future bailouts of failing financial institutions.
Rep. Pete Sessions, R-Texas, compared the bank bill to this year’s health care legislation, saying expanded government “will encroach on every single one of us and ultimately crush us.”
Congressional Democrats have been inching closer to passage of a major rewrite of financial industry regulations, making fixes as they go in hopes of locking in the votes of straying Republicans.
On Tuesday, House and Senate negotiators reconvened to remove a $19 billion fee on large banks and hedge funds after Republican Sen. Scott Brown of Massachusetts threatened to vote against the bill. Brown, of Massachusetts, supported a Senate version of the bill last month but said he objected to the fee, inserted by negotiators last week.
In a statement Wednesday, Brown said he appreciated the removal of the fee, but said he would review the bill over next week’s recess.
Another Republican fence-sitter, Sen. Susan Collins of Maine, said Wednesday she was now inclined to support the bill. Collins, like Brown, succeeded in getting several provisions added to the legislation.
President Barack Obama on Wednesday decried Republican opposition to the bill.
In remarks in Racine, Wis., Obama took aim at House Republican leader John Boehner of Ohio for remarking in a newspaper interview that the financial regulation bill was like using a nuclear weapon on an ant.
“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.
The death of Sen. Robert Byrd, D-W.Va., this week and the fresh objections from Brown and Collins and Olympia Snowe of Maine had threatened to derail the bill. The three were among 61 senators who had previously backed a Senate version of the bill. Democrats need 60 votes to overcome potentially fatal procedural hurdles.
Eager to salvage one of President Barack Obama’s legislative priorities, Democrats dropped the fee that would have helped pay for the legislation. Banks with assets of over $50 billion and hedge funds with assets of more than $10 billion would have footed the bill.
Instead, House and Senate negotiators, voting along party lines, agreed to pay for the bill with $11 billion generated by ending the unpopular Troubled Asset Relief Program — the $700 billion bank bailout created in the fall of 2008 at the height of the financial scare.
They also agreed to increase premium rates paid by commercial banks to the Federal Deposit Insurance Corp. to insure bank deposits. The increase would not affect banks with assets under $10 billion.
Republicans complained the solution was budget gimmickry and that it went against Congress’ desire to use TARP repayments to reduce the debt.
Besides the three Republicans, Democrats also were working to win the support of Sen. Maria Cantwell, D-Wash., who voted against the Senate version last month. She complained the bill was not tough enough on banks.
If unable to secure 60 votes, Democrats would have to wait for West Virginia’s Democratic governor, Joe Manchin, to appoint Byrd’s successor. Manchin has said he has no timetable for his decision.
Copyright 2010 The Associated Press.