The House of Representatives approved what’s likely to be the final version of financial reform yesterday, on a mostly party-line vote of 237 to 192 (roll call). Iowa Democrats Bruce Braley (IA-01), Dave Loebsack (IA-02) and Leonard Boswell (IA-03) voted for the compromise that emerged from a House-Senate conference committee. They had also voted for the original House version last December. Republicans Tom Latham (IA-04) and Steve King (IA-05) voted against the new regulations on the financial sector. The Senate will take up this bill after senators return from the July 4 recess on July 12.

I haven’t blogged much about financial reform because so many important provisions didn’t make it into the original House bill and/or were ditched during the Senate amendment process. Yesterday Democratic Senator Russ Feingold of Wisconsin blasted the “unholy alliance between Washington and Wall Street”:

I cosponsored a number of critical amendments during Senate consideration of the bill including a Cantwell-McCain amendment to restore Glass-Steagall safeguards, Senator Dorgan’s amendment that addressed the problem of “too big to fail” financial institutions, and another “too big to fail” reform offered by Senators Brown and Kaufman that proposed strict limits on the size of those institutions. Each of those amendments would have improved the bill significantly, and each of them either failed or was blocked from even getting a vote.

After that, it wasn’t a close call for me. It would be a huge mistake to pass a bill that purports to re-regulate the financial industry but is simply too weak to protect people from the recklessness of Wall Street. […]

Since the Senate bill passed, I have had a number of conversations with key members of the administration, Senate leadership and the conference committee that drafted the final bill. Unfortunately, not once has anyone suggested in those conversations the possibility of strengthening the bill to address my concerns and win my support. People want my vote, but they want it for a bill that, while including some positive provisions, has Wall Street’s fingerprints all over it.

In fact, reports indicate that the administration and conference leaders have gone to significant lengths to avoid making the bill stronger. Rather than discussing with me ways to strengthen the bill, for example, they chose to eliminate a levy that was to be imposed on the largest banks and hedge funds in order to obtain the vote of members who prefer a weaker bill. Nothing could be more revealing of the true position of those who are crafting this legislation. They had a choice between pursuing a weaker bill or a stronger one.

While we’re on the subject of those conference talks, which catered to a handful of New England Republicans, here’s a textbook case of Republicans negotiating in bad faith:

This week, Democrats sought to confirm the support of Sen. Scott Brown (R) of Massachusetts, who threatened to vote against the bill if it contained $19 billion in new fees on large banks and hedge funds. House and Senate conferees reconvened to remove that provision, but on Wednesday Senator Brown didn’t commit his vote. He said he plans to evaluate the bill over Congress’s week-long July 4 recess.

During the past few weeks David Waldman wrote an excellent series of posts on the conference process and mechanics. Political junkies should take a look, because this won’t be the last important bill hammered out by a conference committee.

As with health insurance reform, the Wall Street reform bill contains a bunch of good provisions. Chris Bowers lists many of them here. Representatives Braley, Loebsack and Boswell also highlighted steps forward in statements I have posted after the jump. On balance, it’s better for this bill to pass than for nothing to pass. But like health insurance reform, the Wall Street reform bill isn’t going to solve the big systemic problems it was supposed to solve. It’s disappointing that large Democratic majorities in Congress couldn’t produce a better bill than this one, and it’s yet another sign we need filibuster reform in the Senate.

Another parallel between health insurance reform and financial reform is that Republican talking points against it are dishonest.

Share any relevant thoughts in this thread.

The U.S. Senate passed the Wall Street reform bill today by a 59 to 39 vote (roll call here). The vote was mostly along party lines, but Democrats Russ Feingold of Wisconsin and Maria Cantwell or Washington voted no, while Republicans Olympia Snowe and Susan Collins of Maine, Scott Brown of Massachusetts and Iowa’s own Chuck Grassley voted yes. Earlier today, a cloture motion to end debate on the bill passed 60 to 40. Only three Republicans voted for the cloture motion (Snowe, Collins and Brown). In other words, Grassley voted against letting the bill advance before he voted for it.

Grassley typically wouldn’t be the only conservative Republican voting with a handful of New England moderates. Like Howie Klein, I wonder whether Grassley was concerned about this bill becoming an election issue. Roxanne Conlin’s campaign blasted Grassley yesterday for joining the Republican filibuster of the bill.

The financial reform now goes to a formal conference committee to reconcile differences between the House and Senate versions. Annie Lowrey discussed that process and some of the contentious issues here. I’m not hopeful about the final product.

Lots of amendments to more strongly regulate the financial industry bill didn’t get a vote in the Senate, including Tom Harkin’s proposed limit on ATM fees. Jeff Merkley of Oregon and Carl Levin of Michigan were unable to get a vote on their amendment to reinstate the “Volcker rule” (banning proprietary trading by banks). There was a small silver lining in that opposition to Merkley-Levin scuttled a horrible idea. Earlier this week Merkley and Levin attached their amendment to a terrible Republican amendment, which would “[exempt] auto dealers from new consumer protection laws, even though auto loans are the biggest instances of financial malfeasance against consumers, especially military personnel.” Today Senator Sam Brownback of Kansas withdrew his auto dealer amendment in order to prevent Merkley-Levin from getting a vote.

UPDATE: Statements from Harkin, Grassley and Conlin are after the jump. Harkin and Grassley both called the bill “a step in the right direction” even as they lamented its flaws. Harkin lamented that several specific proposals were not adopted or considered, while Grassley called attention to his amendments that became part of the bill. Conlin praised Grassley’s vote for the reform bill and claimed that grassroots efforts “turned up the heat” on Grassley, prompting him to reverse “his five previous votes to block debate on Wall Street reform.”

The massive oil spill in the Gulf of Mexico and the many primary elections this month have drawn much of the media’s attention away from the Senate debate on financial reform. That’s too bad, because this bill will affect the future stability of our financial system and the ability of financial institutions to fleece consumers. I’ve been catching up with David Dayen’s superb coverage of the financial reform debate, and most of the news isn’t encouraging.

Senate Republicans voted several times in early May to block the bill from coming up for debate, but they soon decided that was not a viable strategy. In the early days of Senate debate, some decent amendments were adopted to strengthen the bill. For example, one amendment sponsored by Jeff Merkley of Oregon and Amy Klobuchar of Minnesota, which passed last week, would ban some deceptive practices by mortgage lenders.

This week Republicans have been trying to “run out the clock” on more strengthening amendments. By denying unanimous consent to bring these amendments to a vote, they have been able to keep the Senate from voting on an amendment by Byron Dorgan of North Dakota, which would ban naked credit default swaps. Republicans have also blocked a vote on Tom Harkin’s amendment to cap ATM fees at 50 cents. In addition, a measure backed by Merkley and Carl Levin of Michigan, which would impose the so-called “Volcker rule,” has been denied a vote. Merkley-Levin “would ban proprietary trading at banks and require the Federal Reserve to impose tougher capital requirements on large non-banks that engage in the same type of trading”. I have a sense of deja vu reading about the Merkley-Levin amendment; like the public health insurance option, Merkley-Levin has the stated support of the White House and Senate Majority Leader Harry Reid. And as with the public option, these Democrats won’t do what’s necessary to get Merkley-Levin into the bill.

Meanwhile, many Senate Democrats are doing Wall Street’s bidding by watering down key provisions of the financial reform. Most of the Democratic Senate caucus backed an amendment from Tom Carper of Delaware, which “would block class-action lawsuits by state Attorneys General against national banks” and “would allow the Office of the Comptroller of the Currency to pre-empt regulation at the state level of consumer financial protection laws.” Chris Dodd of Connecticut got an amendment through last night that eliminates real derivatives reform from this bill. Now, instead of forcing some large banks to spin off their businesses in trading derivatives, Dodd’s amendment delays that move for two years so the issue can be further studied.

Dayen concludes, “Overall, we have a bill that got less bad through the Senate process, but is generally as mediocre as the House’s version, better in some ways, worse in others. And there’s a whole conference committee to go.” Looks like we’ll be stuck with a bill that only gives the appearance of solving key problems, as opposed to a bill that would solve the key problems.

One point worth noting: Senator Chuck Grassley joined Republican efforts to block the financial reform bill earlier this month, but during the debate he has voted for some regulations that most Republicans opposed. For instance, he voted for the stronger language on regulating derivatives trading when it came up in the Senate Agriculture Committee. He was also one of a handful of Republicans to vote for the Merkley-Klobuchar amendment on lending standards. Grassley said recently that there’s a lot of anti-incumbent sentiment this year, and I think he is trying to compensate for his long and consistent record of standing up for Wall Street interests. Analysts outside Iowa agree that Grassley’s re-election contest is looking more competitive than it did last year (though Grassley is still favored).

Share any relevant thoughts in this thread.

WEDNESDAY AFTERNOON UPDATE: Dodd withdrew his derivatives amendment today, Merkley and Levin are trying a new tactic to get their amendment considered, and Reid’s cloture vote failed today, 57-42, despite two Republicans yes votes (Olympia Snowe and Susan Collins of Maine). Reid voted no at the last minute so that he could bring up the matter again tomorrow. Two other Democrats voted no: Russ Feingold of Wisconsin and Maria Cantwell of Washington. Like several other Senate progressives, Feingold wants votes on more strengthening amendments, and Cantwell isn’t happy with “a loophole in the derivatives piece”.