WASHINGTON (Bloomberg) -- The U.S. House of Representatives on Wednesday approved the financial-overhaul bill, moving a step closer to enacting the broadest rewrite of Wall Street rules since the Great Depression.
The House voted 237-192 in favor of the bill, which contains a controversial exemption for auto dealers. The bill also will have to be approved by the Senate, which delayed action until after the weeklong July 4 recess, before going to President Barack Obama for him to sign into law.
As debate began Wednesday, House Financial Services Committee Chairman Barney Frank discounted Republican criticism that the bill gives regulators new powers to keep insolvent firms alive.
“If an institution has gotten so indebted that it should not be able to pay its debts, we step in and put it out of business,” Frank said.
The legislation, which adopts proposals put forward by the White House last year, would create a consumer financial protection bureau at the Federal Reserve, give the government new authority to liquidate large failing financial firms and set up a council of regulators to monitor threats to the economy. It's a response to the 2008 crisis that led Congress to set up a $700 billion rescue program to extend aid to large firms including American International Group Inc. and Citigroup Inc.
President Barack Obama called the vote “a victory for every American who has been affected by the recklessness and irresponsibility that led to the loss of millions of jobs and trillions in wealth.” In a statement, Obama said he looks forward to signing a bill after Senate passage.
The new consumer-finance agency would oversee mortgages, credit cards and other consumer financial products. But dealers' role in arranging loans for customers would not be subject to supervision, enforcement or rule-writing by the so-called Consumer Financial Protection Bureau.
Instead, the agency would oversee the financial institutions including Ally Financial that extend credit to auto customers, as well as the few dealers that provide direct financing themselves.
Dealers would continue to fall under the supervision of the Federal Trade Commission and state authorities.
“This bill is a massive intrusion of federal government into the lives of every American,” Alabama Representative Spencer Bachus, the top Republican on the House Financial Services Committee, said before the final vote. “It will move us further toward a managed economy with the federal government making decisions that have been and should stay in the hands of individuals and private businesses.”
The House rejected a motion offered by Republicans to send the bill back to the conference committee, a procedural effort to essentially kill the legislation. The motion was meant “to ensure a robust and comprehensive audit of the Federal Reserve and to address a small but significant job-killing measure,” Republicans said in a news release.
The Senate's final vote will be delayed until the middle of July because of the death of U.S. Sen. Robert Byrd, D-W.Va. Byrd's body will lie in repose in the Senate chamber tomorrow and a memorial service will be held in Charleston, W.Va., on July 2.
Neil Roland contributed to this report.