Consumer Law

Senate Passes Wall Street Reform, 59-39; Auto Dealer Exemption and Volcker Rule Both Fail; Independent CFPA Likely

By Deepak Gupta

by Deepak Gupta

By a vote of 59-39 tonight, the Senate passed sweeping legislation to tighten the rules governing the U.S. financial system. President Obama, speaking from the Rose Garden, called the reforms the ?strongest consumer protections in history.?

Only four Republicans -- Scott Brown, Chuck Grassley, Susan Collins, and Olympia Snowe -- joined with all but two Democrats in voting for the legislation. (Maria Cantwell and Russ Feingold opposed the bill for not being more aggressive in reforming Wall Street). Robert Byrd and Arlen Specter didn't vote. Brian Beutler at Talking Points Memo offers this report; the New York Times coverage is here.  And for those who haven't been following the legislation, the Washington Post this handy chart with the highlights.

What happened to the auto-dealer exemption and the restrictions on proprietary trading (the Merkley-Levin amendment or Volcker Rule)?  As we mentioned earlier today, their fates were tied:  As the Senate neared a final vote, Senator Brownback withdrew his auto dealer exemption. Because the two amendments were linked, that had the effect of killing the Merkley-Levin amendment.  (Update: As Rob Bramson notes in the comments, the Post reports that this was the result of a last-minute deal: "There would be no vote on Brownback's amendment, and hence no vote on the Levin and Merkley's provision, either. But the Senate would plan to hold a procedural vote Monday to instruct members of the House-Senate conference to consider exempting auto dealers in the final measure."  So the fight over the auto-dealer exemption may not be over.)

Several major differences between the House and Senate bills -- including whether there will be a truly independent Consumer Financial Protection Agency or whether it will be a mere bureau housed at the Fed -- will need to be worked out in conference. Politico quotes Barney Frank's prediction that the independent agency will win out: ?The Fed feels it?s like, you know, having your ex-wife?s brother living in the house after you got a divorce,? Frank said of the Federal Reserve?s reluctance to house the agency, which was done to win Sen. Bob Corker?s (R-Tenn.) vote. But since Corker did not support the bill, ?you?ll have an independent CFPA,? Frank said.

Full post as published by CL&P Blog on May 20, 2010 (boomark / email).