Washington – For Rep. Jim Himes, House approval late Thursday of legislation that would allow banks to trade certain derivatives — a measure he’s been promoting for years — is a bittersweet victory.
“I’m not happy that it became a super-hot button issue when it always received bipartisan support,” Himes said.
The provision stirred up a Democratic firestorm that threw passage of the country’s omnibus spending bill into a last-minute tailspin.
Backed by Himes, D-4th District, the legislation was included in the massive $1.1 trillion budget bill the House approved on a 219-206 vote just hours before current legislation funding the federal government expired at midnight.
Himes was the only member of Connecticut’s delegation to the U.S. House of Representatives and one of only 57 Democrats to vote for the budget bill.
He said he supported the omnibus bill “because I don’t want a government shutdown and because every one of the residents of my district demand functionality” of the Congress.
The bill’s provision on derivatives would lift a Dodd-Frank Act prohibition on the trading of these complex financial securities by bank units insured by the federal government. Some derivative trading among the factors blamed for the 2008 financial collapse.
The omnibus budget bill was approved after hours of bitter debate over the derivatives measure that was derided by Himes’ fellow Democrats — including Rep. Rosa DeLauro, D-3rd — as a shameful Wall Street bailout.
“The bill gambles with our financial system,” DeLauro said in an impassioned speech on the House floor. “It would reverse Dodd-Frank safeguards, allowing banks with Federal Deposit Insurance to engage in some of Wall Street’s riskiest transactions — the same transactions that caused the crisis in which millions of hard working Americans lost their jobs, their homes and their savings. Why would we want to put families at risk once again?” she asked.
The budget bill now goes to the Senate, which is expected to approve it late Friday. Because the Senate was unable to act on the budget bill before midnight on Thursday, both chambers quickly approved a two-day extension of the government’s current spending levels.
Himes was not responsible for including the derivatives language in the spending bill, but has championed the legislation for years.
The original legislation sponsored by Himes was approved as a stand-alone bill in the House last year, with the support of 70 House Democrats.
But it became a lightning rod for Democrats Thursday after Sen. Elizabeth Warren, D-Mass., and other Democrats, including House Minority Leader Nancy Pelosi, condemned it. They characterized the derivatives legislation as something Republicans inserted in the budget bill during House-Senate negotiations over the omnibus.
No one claims to know how the language, promoted by Wall Street lobbyists, was included in the budget bill.
“It was done in the Senate, but we’re unclear on how it happened,” said Rep. Jan Shakowski, D-Ill.
Late Thursday, White House Chief of Staff Denis McDonough rushed to the Capitol to speak at a meeting of House Democrats in an attempt to persuade them to vote for the bill. This was taking place even as the White House administration issued a statement on the omnibus bill that said: “In particular, the administration is opposed to the inclusion of a rider that would amend the Dodd-Frank Wall Street Reform and Consumer Protection Act and weaken a critical component of financial system reform aimed at reducing taxpayer risk.”
Another provision in the omnibus bill, which would lift a cap on the amount of money rich donors could give political parties, also provoked sharp criticism from the White House and House Democrats.
“The spending bill that passed tonight at the eleventh hour does keep the government open, which is a good thing,” said Rep. Joe Courtney, D-2nd District. “Unfortunately, it includes totally unrelated special interest giveaways that undermine the protections for our economy against big bank failure, as well as open up a massive new loophole for super-rich political donors to unfairly influence our democracy. That is why I could not use the vote of the Second District to secure passage.”