Despite the fact that
35 House Democrats voted with Republicans to gut the Volcker Rule and other key parts of the Dodd-Frank Wall Street reform law, the bill failed. That's in large part thanks to Republican arrogance in assuming they could pass the bill quickly as a suspension. That would have prevented the bill from being open to amendments, but it also required a two-thirds majority vote. Minority Leader Nancy Pelosi
managed to deny that by rallying enough Democrats to defeat it.
The bill would have allowed banks to hang onto billions of dollars in risky collateralized loan obligations for two additional years by amending the Volcker Rule, which is part of the 2010 Dodd-Frank financial reform law. The rule bans banks from speculating in securities markets with taxpayer funds, requiring them to dump their CLO holdings. A Volcker Rule delay would be a major boon to the nation's largest banks. Between 94 and 96 percent of the domestic CLO market is held by banks with at least $50 billion in assets, according to federal regulators, who value the market at between $84 billion and $105 billion. […]
The vote was a major test of the Democratic Party's willingness to fight financial deregulation. In December, Congress passed a $1.1 trillion budget bill that included subsidies for risky derivatives trades, the complex contracts at the heart of the 2008 meltdown. Pelosi, Rep. Maxine Waters (D-Calif.) and Sen. Elizabeth Warren (D-Mass.) had organized resistance to that legislation, only to be narrowly outgunned by personal lobbying late into the night from President Barack Obama and JPMorgan Chase CEO Jamie Dimon. Passing another deregulatory measure on the second day of the new Congress would have been a serious blow to the financial reform wing of the Democratic Party and emboldened GOP efforts to repeal Dodd-Frank.
Pelosi got 80 percent of the Democratic caucus to oppose the bill and stop it—an impressive feat when pro-Wall-Street bills regularly get 100 more Democratic votes. But this Republican Congress shouldn't be getting any Democratic votes, ever. And Democrats should not be voting with Wall Street and against Main Street, ever. It's encouraging that Pelosi—along with opposition from President Obama—stopped this one, but Republicans will be back with it, and it will likely pass. But it shouldn't do so with any Democratic help.
