Washington – Rep. Jim Himes split with the rest of Connecticut’s House delegation on Wednesday by voting for a bill opponents say would weaken the Dodd-Frank financial reform bill.
The “Promoting Job Creation and Reducing Small Business Burdens Act” is a package of 11 bills, most of them uncontroversial. But a provision that would amend the Dodd-Frank Act kept most Democrats from supporting the bill — even some, like Rep. Elizabeth Esty, D-5th District, who voted for the legislation last week.
House Republicans tried to win expedited approval of the package last week. Himes and Esty voted for the legislation but it failed to win the two-thirds majority need under the expedited rule.
On Wednesday, the legislation was approved by a straight majority, 271-154, with 29 Democrats, including Himes, voting for the legislation. But Esty had a change of heart.
“I support reforms to Dodd-Frank to make it work better, which is why I’ve voted for modest changes in the past,” Esty said. “But I’ve come to the conclusion that this bill goes too far in rolling back protections and unnecessarily extending delays on the implementation of Dodd-Frank. We need a better bill with more modest reforms.”
The legislation would allow banks to hold on to financial investments known as collateralized loan obligations, or CLOs, two years longer than currently allowed under the Volker Rule, the regulation that aims to reduce speculative trading by federally insured banks.
Progressives say CLOs are a risky form of financing that could lead to another financial collapse. But Republicans and centrist Democrats such as Himes say CLOs are an important way for businesses to obtain financing in a sluggish economy.
“As someone who helped write Dodd-Frank, it would be politically easier for me to simply say that the law is sacrosanct and cannot be improved in any way shape or form,” Himes said. “But that’s not realistic, nor is it helpful to making sure we strike the right regulatory balance for an industry that’s vital to every aspect of our economy. This bill, which includes several provisions that won overwhelming bipartisan support in the last Congress, helps move closer to achieving that balance.”
Himes, a member of the House Financial Services Committee, is likely to continue to be out of step with the rest of Connecticut’s lawmakers – all Democrats – on issues pertaining to changes in the Dodd-Frank Act.
Democrats, led by Sen. Elizabeth Warren, D-Mass., and House Minority Leader Nancy Pelosi, D-Calif., have made a campaign of protecting Dodd-Frank from any changes.
The campaign was given impetus by one of Congress’s last acts of 2014, which was to approve as part of a massive budget bill a measure that largely repeals a Dodd-Frank’s requirement that banks push the trading of derivatives into subsidiaries that are not federally insured. Supporters of the change said the so-called “swaps push-out rule” was too much of a burden to community banks.
Himes had championed the derivatives provision for years and was the only member of the Connecticut House delegation to vote for the budget that included the provision.