Sweeping financial regulatory legislation cleared a major hurdle early Friday morning after House and Senate conferees reached a final deal on controversial derivatives language by Sen. Blanche Lincoln (D-Ark.).
The vote puts the massive bill one step closer to the president’s desk and marks a major victory for Senate Banking Chairman Chris Dodd.
The Connecticut Democrat — the chairman of the Banking Committee — and House Financial Services Chairman Barney Frank (D-Mass.) have vowed to get the measure to President Barack Obama before July Fourth, but Democratic leaders in both chambers will first have to hold their caucuses together. The leadership considers the overhaul a strong piece of the party’s political message for the midterm elections.
Votes are expected next week in the House and Senate.
For Dodd, the legislation would be the capstone of his 30-year Senate career. The veteran Democratic lawmaker is retiring at the end of the year after five terms.
“The American people have called on us to set clear rules of the road for the financial industry to prevent a repeat of the financial collapse that cost so many so dearly,” Dodd said. “This bill meets that challenge.”
The final conference vote came after hours of debate over the most controversial sticking points of the bill, particularly the language by Lincoln. A large number of House Members had expressed concern about her language, which was included in the base bill; other lawmakers had demanded it remain in the final product.
But the compromise that conferees reached on Lincoln’s language might still pose a problem on the Senate floor. Sen. Chuck Grassley, who voted in favor of Lincoln’s proposal in the Agriculture Committee, which Lincoln chairs, and supported the Senate bill on the floor last month, cautioned Wednesday against “watering down” the derivatives language.
“I voted for it in the Ag committee, and it’s one of the main reasons I voted for it on the floor of the Senate,” the Iowa Republican said.
Swing votes such as Grassley’s will be closely watched, but most Republicans are expected to oppose the conference report on the floor. Republicans have charged that the legislation would not effectively end taxpayer bailouts and that it excluded Fannie Mae and Freddie Mac from its reach.
The Senate passed its version of the financial regulatory overhaul, 59-39, last month with the support of four GOP Senators. No Republican voted for the House version that passed 232-202 in December.
The bill’s key provisions include language that would create a consumer protection agency, give shareholders the power to determine the compensation packages of company executives and establish a council of regulators to monitor large institutions.