House approves Wall Street reform

Democratic efforts to overhaul Wall Street inched closer to the finish
line on Wednesday as the House approved the legislation and a key
Senate Republican announced her support.

The House approved the conference report in a 237-192 vote. Nineteen Democrats
voted against the measure, while three Republicans voted for it. No Republicans voted for the House version of the bill. 

The three Republicans who voted for the measure were Rep.
Mike Castle (R-Del.), who is running for the Senate; Rep. Joseph Cao (R-La.),
one of the most vulnerable Republicans in Congress; and Rep. Walter Jones
(R-N.C.).

Many of the Democrats who voted against the measure face
tough reelection fights this year or are in districts that lean Republican.
They included Reps. Rick Boucher (Va.), Bobby Bright (Ala.), Travis Childers
(Miss.), Mark Critz (Pa.), Tom Perriello (Va.) and Ike Skelton (Mo.).

Earlier in the day, Sen. Susan Collins
(R-Maine) said she would vote for the conference report after House and Senate negotiators reconvened late Tuesday to remove up to $19
billion in new fees on large financial firms.

Still, Senate
Democrats said they would need to delay a final vote on the 2,300-page
bill until after the July 4 recess. The party has yet to clinch the 60
votes necessary to overcome procedural hurdles, with a handful of
crucial Democratic and Republican senators yet to announce how they
will vote.

The
legislation aims to prevent future taxpayer-funded bailouts; boost
regulation over credit cards, mortgages and other products; regulate
the $600 trillion derivatives market; and increase oversight of broad
financial system risks, among other measures.

Republicans continued to criticize the legislation, arguing that it
doesn’t do enough to end the problem of firms that are viewed as “too
big to fail,” and remains silent on regulation of Fannie Mae and
Freddie Mac, the two mortgage giants taken over by the government in
2008. They argue it will hurt the economy by costing jobs through the
contraction of credit.

“In total, this bill is a massive intrusion of federal government
into the lives of every American,” said Rep. Spencer Bachus (R-Ala.).
“It is the financial services equivalent of Obamacare, the government
takeover of the healthcare system.”

Democrats went on the attack on Wednesday, criticizing House
Republican Leader John Boehner’s (R-Ohio) comments in a Pittsburgh
newspaper interview that compared the legislation with “killing an ant
with a nuclear weapon.” Obama took aim at the remark, saying on a trip
to Racine, Wis.: “He compared the financial crisis to an ant. The same
financial crisis that led to the loss of nearly eight million jobs.”

Senate Democrats continued Wednesday to shore up support for the bill.

Sen.
Russ Feingold (D-Wis.) remains opposed to the bill, and Sen. Maria
Cantwell (D-Wash.), who was opposed in May, said Wednesday she is still
reviewing the legislation. Democrats are also short another vote in
support because of Sen. Robert Byrd’s (D-W.Va.) death; his replacement
will be named by the state’s Democratic governor.

Collins and Republican Sens. Scott Brown (Mass.) and Olympia Snowe
(Maine) had raised concerns about the $19 billion in fees. Brown said
Wednesday he would continue to review the legislation during the
recess. The three Republicans were central to Senate passage of an
earlier version of the legislation in May.

The new version of the bill pays for the overhaul with unused money
from the $700 billion financial bailout and changes to the government’s
fund for deposit insurance. The deposit insurance fund change will
exempt banks with $10 billion or less in assets.

The earlier form of the bill would have raised fees on financial
companies with at least $50 billion in assets and hedge funds with at
least $10 billion in assets under management. Federal regulators would
have had to spell out the specifics of the fees, but hedge funds and
insurers were alarmed by the possibility that they needed to front the
costs of the bill.

The American Insurance Association (AIA) and National Association
of Mutual Insurance Companies (NAMIC) praised the change. ““This fee
would have unfairly included some property/casualty insurers in a
pre-funding mechanism to fix problems that our industry did not cause,
burdening insurers and their customers with the costs of the bill,”
said Jimi Grande, NAMIC’s senior vice president.

The fees could have hit nearly 30 large hedge funds. There are 29
U.S.-based hedge funds that manage at least $10 billion in assets,
according to Hedge Fund Research, an industry research firm. Those
firms represent a combined $517 billion in assets, or roughly one-third
of the $1.67 trillion in total industry assets, according to the firm.