Nine months and 1,300 pages later, the House’s legislative package of sweeping financial reforms will hit the floor next week, with a vote on the bill coming as soon as Thursday, according to a Congressional source.
Though the chance of passage in the House is high, the effort may stall there for awhile, as the Senate has yet to work through its version of the bill, which covers everything from too-big-to-fail firms to derivatives trading to banking regulation.
When the House Financial Services committee chaired by Rep Barney Frank (D-Mass) began working on the first of the bill’s many parts in June, there was some hope President Obama—whose economic team laid out a blueprint for Congress—would sign the bill into law by year's end.
Such an event would now qualify as something of a Christmas miracle now.
“By the end of the year is very unlikely,” said a senior Congressional source in something of an understatement.
The massive Wall Street Reform and Consumer Protection Act, as the package is known, is expected to go to the House floor on Wednesday for debate and the amendment process. Depending on how long that takes, a vote could come Thursday or Friday. All ten parts of the bill have already been approved at the committee level, in most cases, by healthy margins. Two parts—executive compensation and consumer protections—have been voted on and approved by the full House.
The White House offered its first proposals on reform in late February, when the financial crisis was still a major threat to the economy. Since then, the need to pass major reforms has become less urgent for some in Congress.
Even as the House takes up the legislation first—standard procedure for lawmakers— the Senate’s version of the controversial bill meant to prevent another financial crisis is no procedural formality.
Sen. Chris Dodd (D-Conn.), whose banking committee is handling the legislation, is known to favor different approaches in a number of key areas, including the regulatory structure for the banking industry. Dodd, for instance, would consolidate the regulatory authority of four agencies, including the Federal Reserve, into one new entity. Frank’s bill would only consolidate the activities of two agencies into one, leaving some jurisdiction to the Fed and the Federal Deposit Insurance Corporation.
A draft version of Dodd’s legislation recently ran into significant opposition on the committee level from both Democrats and Republicans, eliminating any chance of a vote in the near future. The GOP has talked about submitting an alternative version but that seems unlikely at this point.
Dodd and Sen. Richard Shelby (R-Ala.), the senior Republican on the committee, have had talks in the past week to discuss differences, according to another source.
The two versions of the bill, regardless of the Senate's final form, are likely to go through a complicated reconciliation process, wherein the two chambers have to hammer out a compromise version.
“There will be tons to reconcile,” said the source.
The reform process has also been complicated by something of a populist revolt in Congress against the unchecked powers of the Federal Reserve and the policies of Chairman Ben Bernanke, who used a variety of aggressive and unconventional measures to stabilize Wall Street and the financial system during the crisis.
Bernnanke, who is facing Senate confirmation for a second term, along with Treasury Secretary Timothy Geithner, has become ightning rods for critics of White House intervention in the private sector, both under the Obama and Bush administrations.
House Republicans introduced a plan that would limit the Fed’s authority to monetary policy and also address the role of the government-sponsored mortgage giants Fannie Maeand Freddie Mac in the financial crisis. The House legislation on its way to the floor next week does not specifically address the future structure or role of the two entities although some of its provisions clearly apply to them.