This was a vote on an amendment offered by Rep. Bachus (R-AL), which was put forward as a Republican substitute for the bill designed to implement the most significant regulatory reform of the financial industry since the Great Depression
Rep. Bachus acknowledged that “we have a need to reform the financial industry. . . .” He claimed that H.R. 4173, as it was currently written, “isn't the answer.” Bachus said his amendment would make H.R. 4173 “a financial recovery and reform bill, not a permanent Big Brother government bailout program.” He claimed it would implement “reforms that will facilitate competition in the market place and generate more choices for consumers. (It will also implement) reform that will equip consumers with the information that they need to shop around and make the financial decisions . . . We need a stronger regulatory regime to quickly expose, stop, and put behind bars any Wall Street crooks that break the law. And financial firms that fail should do just that: fail through a new, orderly bankruptcy process.”
Rep. Royce (R-CA) supported the amendment and said its provisions that “reform” Fannie Mae and Freddie Mac were critical because these companies were “at the heart of the housing market (and) the root cause of the (recent) financial collapse”. Royce then said that H.R. 4173, which he referred to as “the Democratic bill”, would “bail (those companies) out forever in their legislation . . . .”
Rep. Kanjorski (D-PA) opposed the amendment. He said it “seems designed to protect Wall Street rather than to reform it. The Republican (Bachus) plan also does little to improve investor protections (and) . . . the GOP substitute does absolutely nothing to address the issue of liability. And without liability, the Republican plan provides no accountability for the rating agencies. The GOP plan additionally chooses bankruptcy for systemically significant firms. Well, Lehman Brothers went through bankruptcy and is still in bankruptcy, which resulted in credit markets freezing up around the world. This is not a real solution. In sum, H.R. 4173 reforms Wall Street for the protection of the consumer and the investor on Main Street. The Republican alternative, in contrast, represents business as usual for Wall Street.”
Rep. Meeks (D-NY) said he opposed the amendment because H.R. 4173, as written, would “strengthen our system of capitalism and free enterprise. To those who criticize this legislation as anti-markets, I would counter that this legislation is good for consumers and good for businesses because investors are staying out of the market right now and companies across the nation are struggling to stay in business, let alone creating desperately needed jobs. By strengthening protections for consumers and investors and bringing transparency and accountability to the market place, we are restoring the cornerstone of a healthy and sustainable economy . . . .”
The amendment was defeated by a vote of 175-251 along almost straight party lines. One hundred and seventy-two Republican and three Democrats voted “aye”. Two hundred and forty-eight Democrats and three Republicans voted “nay”. As a result, the House rejected the provisions put forward in the amendment to substitute for the bill designed to implement the most significant regulatory reform of the financial industry since the Great Depression.