Maxine Waters ‘optimistic’ Wall Street change can be removed

The top House Democrat on the Financial Services panel says she’s “increasingly optimistic” a spending bill will be blocked unless changes to the Wall Street reform legislation are stripped from the package.

“I am increasingly optimistic that House Democrats will come together to defeat this effort to protect Wall Street’s biggest banks,” Rep. Maxine Waters (D-Calif.), the panel’s ranking member, said in a statement.

{mosads}Liberals are up in arms over the Wall Street reform changes included in the $1.1 trillion government-funding package, though it appears many lawmakers are ready to approve the legislation to keep the government open.

House appropriators have expressed confidence the legislation will be approved by the House despite the grumbling. The package was negotiated by House Republicans and Senate Democratic appropriators.

One provision in the bill would reverse a portion of the 2010 Dodd-Frank Wall Street Reform Law by allowing big banks to include derivatives — a riskier form of financial trading — in bank accounts that are backed by the Federal Deposit Insurance Corporation. In Washington financial circles, the provision is called the “swaps push-out” provision. 

Waters said that “even members that supported this as a standalone measure expressed concerns” about including the change in the spending bill.

The Wall Street tweak is based on a bipartisan bill that passed the House in October 2013 on a 292-122 vote, with 70 Democrats joining 222 Republicans.

Liberals, led by Sen. Elizabeth Warren (D-Mass.), say the provision would allow for big banks to engage in risky financial trading that led to the 2008 economic collapse. 

Supporters of the bill — including former Federal Reserve Chairman Ben Bernanke — argue that the bill would help boost economic growth. 

They also argue that if lawmakers don’t allow for derivatives to be included in FDIC-backed accounts, bad actors in the banking industry will take their businesses in unregulated markets.