This was a vote on the resolution or “rule” setting the terms for debating H.R. 4173. That bill was designed to prevent the kind of major financial crisis that had recently occurred, and to implement the most significant regulatory reform of the financial industry since the Great Depression.
Among other things, the bill created a new Consumer Financial Protection Agency, strengthened the enforcement abilities of the Federal Trade Commission, included provisions intended to prevent future bailouts of institutions that are “too big to fail", gave shareholders an advisory vote in executive compensation, strengthened the SEC's powers, initiated regulation of sensitive financial instruments known as “derivatives, toughened anti-predatory lending practices, imposed a higher liability standard on the rating agencies, and created a Federal Insurance Office.
Rep. Perlmutter (D-CO) was leading the support for the rule for this legislation, Perlmutter described the provisions in the bill as “a comprehensive package of reforms to address the numerous failures that led to the near collapse of our financial system . . . . “ He claimed that, among other things the bill “makes robust consumer protection repair and reform (and) . . . puts the regulation of consumer protection on a level playing field with the regulation of safety and soundness of our financial institutions.” He also claimed that the bill will “increase (financial) transparency and accountability . . . (and) is critical to protect taxpayers and consumers by reining in the abuses of Wall Street, while enabling a balanced environment for the financial markets to grow and stabilize our economy. These changes are essential to rebuilding Main Street and getting credit flowing to small businesses, creating jobs, and rebuilding our economy.”
Rep. Dreier (R-CA) was leading the opposition to the rule. He also focused on the substance of H.R. 4173 to support his position. Dreier began by agreeing that: “We must reform our financial regulatory system to prevent the kind of catastrophic breakdown that occurred last year.” He then added that: “We must do so in a way that preserves access to credit for families and small businesses, promotes job creation, ends taxpayer-funded bailouts, and allows us to begin to pay down this horrendous national debt that we're all facing. Unfortunately (H.R. 4173) . . . fails on all counts. “
Dreier argued that the legislation would make the regulatory system “more complicated and less accountable, more unworkable and less transparent. The task at hand is not about increasing regulation or diminishing regulation. It is about making it smarter, more accountable, and more effective.” Dreier said: “By adding multiple layers of new bureaucracy and making agencies like the Federal Reserve System even less accountable than before, (the bill could) . . . compound the very problems that led to our current situation.” He particularly criticized provisions that he claimed would “keep the taxpayers on the hook for a permanent system of bailouts.” Dreier added that one of the negative effects of the additional regulations imposed by the bill would be to increase “the credit crunch (which) . . . threatens further job destruction and (slows) growth.”
The rule setting the terms for debating the legislation was approved by a vote of 235-177. All two hundred and thirty-five “aye” votes were cast by Democrats. Seven other Democrats joined all one hundred and seventy Republican and voted “nay”. As a result, the House was able to begin debate on the bill imposing the most significant regulatory reform of the financial industry since the Great Depression.