WASHINGTON -- House Republicans on Wednesday pushed through a bill that would delay a key section of the Volcker Rule, ignoring staunch opposition from Democrats and a veto threat from President Barack Obama.
The vote of 271-154 included just 29 Democratic supporters. Rep. Walter Jones (R-N.C.), a persistent opponent of Washington favors for big banks, was the lone Republican to stand against the bill.
"If at first you don't succeed, try, try, again," said Rep. Maxine Waters (D-Calif.) on the House floor the evening before the vote. "Usually we use that saying with children, to encourage them to achieve greater things, but it seems that when it comes to Congress, it's what Wall Street keeps telling House Republicans."
The legislation is a compilation of 11 bills that chip away at the 2010 Dodd-Frank financial reform law. All but one passed the House by wide margins in 2013 and 2014, but died in the Senate, where then-Majority Leader Harry Reid (D-Nev.) refused to put them on the floor for a vote. The most controversial measure in the collection is a two-year delay of a requirement that banks offload "collateralized loan obligations" -- risky packages of corporate debt that are sliced off for sale to investors. Similar collections of risky mortgages were at the heart of the 2008 meltdown, and federal regulators have been warning about the corporate debt market overheating.
Big banks dominate the CLO market, which regulators say is between $84 billion and $105 billion in size. JPMorgan Chase alone holds about $30 billion in CLOs.
But the political economy implications of the vote are still more significant. Former International Monetary Fund Chief Economist Simon Johnson and others view the delay as the next step in a piecemeal effort to repeal Dodd-Frank in its entirety. And indeed, on Tuesday night, Republicans pushed through another bill that would create new red tape for regulatory agencies, making it more difficult for them to write and enforce rules.
The CLO provision has already been delayed to July 2017. The bill that passed the House Wednesday would push back the deadline until 2019.
"This bill is Republicans' New Year’s present to Wall Street -- announcing open season on the essential reforms that protect taxpayers from the recklessness of big banks," Pelosi said in a statement provided to HuffPost. "Democrats will continue to fight these brazen special interest giveaways, and demand Congress act on the priorities of working people."
The Republican-controlled Senate likely has the votes to pass the bill, but the House does not have the two-thirds majority to override a presidential veto. Democrats expect the GOP to attach Wall Street-friendly bills to critical legislation -- like bills to fund the government or raise the debt ceiling -- in order to force Obama's hand. In December, Obama signed off on a deal to push through subsidies for bank trading in derivatives by repealing a Dodd-Frank provision known as "swaps push-out." The measure was attached to a $1.1. trillion bill to fund the federal government.
Democrats previously knocked down the Volcker Rule delay one week ago, when Republican leaders had put it up for a vote under conditions that had required a two-thirds majority for passage. Republican leaders immediately cried foul, with House Financial Services Committee Chairman Jeb Hensarling (R-Texas) accusing Democrats of flip-flopping to "appease their far left-wing base."
In total, 44 Democrats who had supported similar legislation in September opposed the bill last week. On Wednesday, an additional three switched from yea to nay.
Rep. Gerry Connolly (Va.), one of the bill's few Democratic supporters, echoed that criticism Wednesday. "I voted for it three times so some of us are consistent," said Connolly, saying that "blogs on the left" had used "exaggerated rhetoric" to criticize the legislation.
Rep. Gregory Meeks (D-N.Y.), who supported the bill in September but opposed it twice in January, said the Volcker Rule language in the 2015 edition constituted a "poison pill."
"Some members of the party understand that there needs to be some fixes in Dodd-Frank, but you can't -- I don't think you should put poison pills in the bill," Meeks told HuffPost.
Since the September version of the bill delayed the Volcker Rule's CLO requirement until only July 2017, some members who switched their votes have cited the delay to 2019 to justify their current opposition.
This week, Democrats prepared more than a dozen amendments, none of which were allowed to be considered under the rule adopted by Republicans. Rep. Stephen Lynch (D-Mass.) penned a host of amendments to narrow loopholes that the GOP bill would create, while Reps. Brad Sherman (D-Calif.) and Ann Kuster (D-N.H.) proposed to simply strike the Volcker Rule language altogether. Rep. Mike Capuano (D-Mass.) submitted language that would have required companies to disclose all of their political campaign donations. Reps. Keith Ellison (D-Minn.) and Raul Grijalva (D-Ariz.) proposed an amendment to permanently end the government spending cuts under the sequester. Grijalva presented a second bill that would have ended subsidies for big banks who trade risky derivatives -- subsidies that were reinstated by Congress in December.
None of these amendments had a chance of passing with Republicans in the majority. But they would have forced the GOP to take unpopular positions, and explicitly ally themselves even more closely with Wall Street.
This post has been updated to note the lone Republican who voted against the bill and to include comments from Connolly and Meeks.