The House passed President Obama's sweeping financial reform measure on a 237-192 party-line vote Wednesday while Senate leaders — still seeking to nail down elusive Republican votes — put off taking up the measure until mid-July.
Mr. Obama began a final drive for enactment, heaping scorn on Republicans who continue to overwhelmingly oppose the measure while accusing the House's top Republican of being "out of touch" for comments that seemed to minimize the financial abuses addressed in the bill.
House Minority Leader John A. Boehner, Ohio Republican, retorted that the president was trying to distract voters from focusing on his own failures to solve the Gulf of Mexico oil spill and other problems.
The stark divisions between the parties over the massive reform bill, unusual for such major financial legislation, show that both parties are gambling that they will gain in the elections from their efforts to pin blame for the blowup on Wall Street on each other.
House Speaker Nancy Pelosi, California Democrat, recollected on the House floor how President Bush's economic team had come to her as the financial crisis unfolded in September 2008 demanding that Congress quickly enact a $700 billion bailout fund for banks or face the certain destruction of the U.S. economy within days.
The Democrats and Republicans who voted for that measure have been paying for their votes ever since amid public outrage over the bailouts, with several unseated in recent primary elections. Millions of U.S. citizens lost their jobs, their pensions, health care and wealth as a result of the financial debacle and deep recession that followed.
"We are here today to make sure that never happens again," Mrs. Pelosi said as she recalled the "vivid" and stark warning by Federal Reserve Chairman Ben S. Bernanke that "there won't be an economy" within days if the Congress didn't act to support the Fed's and Treasury's bailout efforts.
"The party is over. No longer will recklessness on Wall Street cause joblessness on Main Street," she said.
Democrats drafted the bill as a harsh regulatory crackdown on Wall Street banks that fueled the housing and credit bubble by creating complex and risky securities out of subprime mortgages. Several of those banks imploded when the securities blew up during the crisis, and most others got bailouts, which they have since repaid.
The final move of Democrats in drafting a way to pay for the bill Tuesday was officially to shut down the notorious bank bailout program and use the remaining $10 billion in cash left in the fund to pay for the crackdown on banks.
Mrs. Pelosi accused Republicans of defending "Wall Street gambling" and a "status quo" of Washington regulators who did not enforce the law and allowed the Wall Street debacle to unfold unfettered by regulatory restraints.
But Republicans countered that the bill would strangle banks and the larger economy with overregulation, stifling new businesses that need credit and killing jobs while doing little to end the bailouts abhorred by the public.
"The cause of the crisis was not deregulation. It was dumb regulation" that encouraged banks to make loans to people who could not afford to buy houses and repay their loan obligations, said Jeb Hensarling, Texas Republican.
Far from sitting on the sidelines, federal regulators — at the behest of Congress — "strong-armed financial institutions" to make risky subprime loans and then ordered mortgage giants Fannie Mae and Freddie Mac to purchase the lion's share of them to make more money available for further risky lending, he said.
"This legislation perpetuates the same dumb regulation. It doesn't go to the root cause" even as it seeks to end bailouts and risky financial practices by creating new layers of federal regulation, he said.
Left in place by the bill, he noted, are both Fannie and Freddie, and the "mother of all bailouts" that resulted when the Treasury took custody of the mortgage giants in September 2008 to absorb the huge and growing losses from defaulting loans held or guaranteed by the agencies.
Throughout the debate, Democrats poked fun at Mr. Boehner for telling the Pittsburgh Tribune-Review that the regulatory regime set up by the reform bill was so overreaching that it was "like killing an ant with a nuclear weapon." The Democratic establishment hopes to make a campaign issue out of the alleged gaffe.
"He can't be that out of touch with the struggles of American families," said Mr. Obama, in a campaign-style speech in Racine, Wis. "And if he is, he has to come here to Racine and ask people if they think the financial crisis was an ant."
Mr. Boehner did not go to the House floor to defend himself or make a statement on the reform bill before it passed, as is often the case with such major bills.
But he issued a statement saying, "The president should be focused on solving the problems of the American people — stopping the leaking oil and cleaning up the Gulf, scrapping his job-killing agenda, repealing and replacing Obamacare — instead of my choice of metaphors."
House Republicans clearly backed the sentiments expressed by their leader, opposing the bill by an overwhelming vote of 173-3. Democrats were slightly more divided over the measure, with 19 conservative Democrats joining the Republicans in opposition.
The bill faces a more uphill fight to get the 60 votes needed to pass the Senate, where the threat of a Republican filibuster lingers. Two of the four Republicans who put the Senate version of the bill over the top last month — Sens. Olympia J. Snowe and Susan Collins of Maine — have said they're inclined to support the final bill.
But Sen. Scott Brown, Massachusetts Republican, said he would take time during the Fourth of July break to review the bill and decide how he will vote.
To court Mr. Brown's vote, Democrats have made major concessions exempting investment companies in Massachusetts from regulatory limits in the bill.
"From the standpoint of making sure that the kind of institutions we have in Massachusetts are not unduly burdened, thats taken care of," said House Financial Services Committee Chairman Barney Frank, adding that he was puzzled by Mr. Brown's hesitance to support the bill.
"The legitimate concerns of State Street, Liberty Mutual, Mass Mutual — their business model is not being unduly interfered with," the Massachusetts Democrat said.
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