Republicans in the U.S. House of Representatives failed on Wednesday to round up enough votes for a bill scaling back various financial reforms, a surprising defeat in an area conservatives hoped to prioritize this year.
Republican Party leaders brought forward numerous bills to revamp financial reforms under President Barack Obama’s Democratic administration and hoped to make more dramatic changes after taking control of both houses of the U.S. Congress in last November’s congressional elections.
Before the vote on Wednesday, Democrats slammed the bill as a Republican effort to chip away at the 2010 Dodd-Frank financial law, including one provision that would have given banks extra time to comply with part of the Volcker rule.
Supporters fell six votes short of what was needed to send the legislation to the U.S. Senate. The proposal was among the first votes House lawmakers took after returning to Washington this week.
“We’re tired of really bad Wall Street giveaways being tacked onto other legislation,” Representative Jan Schakowsky, a Democrat from Illinois, said on the House floor before the vote.
Some Democrats also were unhappy that the bill contained complex provisions that went straight to the floor without the ability to offer changes first.
A House Democratic aide said Minority Leader Nancy Pelosi urged her members not to support the bill even after voting had begun.
Republicans said the bill would help small businesses raise capital by loosening disclosure rules and making other changes related to the 2012 Jumpstart Our Business Startups (JOBS Act).
The most controversial aspect of the proposal was the section related to the Volcker rule, which bans banks from making risky trades with their own money and prohibits certain investments in financial products.
Republicans sought to give banks more time to exit positions in collateralized loan obligations, or CLOs, which are essentially bundles of business loans. Banks had complained that they would have to quickly abandon those investments.
“If this situation is not addressed, the legacy CLO market will be seriously harmed by a fundamentally unnecessary sale of assets into the secondary market,” Andy Blocker of the Securities Industry and Financial Markets Association said in a letter to lawmakers on Wednesday.
The measure also drew criticism because it would have exempted about 60 percent of public companies from filing financial statements in a machine-readable format called “XBRL” that is used by U.S. regulators and investors.
(Reporting by Emily Stephenson and Sarah N. Lynch; Editing by Caren Bohan and Grant McCool)