House OKs Wall Street reform bill

WASHINGTON (CNNMoney.com) -- The House voted 237-192 Wednesday to pass a sweeping package of reforms to the financial regulatory system, moving the bill a step closer to the finish line.

But the Senate isn't likely to take up the measure until the week of July 12. And it's not clear whether Democrats have secured the votes they need.

After more than 18 months of negotiation and debate, the bill aims to strengthen consumer protection, shine a light on complex financial products and establish a new process for shutting down giant financial firms in trouble.

"We will pass the toughest set of Wall Street reforms in generations," said House Speaker Nancy Pelosi, D-Calif.. "It reflects transparency and accountability...and this legislation makes common sense reforms that ends the error of taxpayer bailouts."

House Republicans voted overwhelmingly against the bill, saying it would usher in an era of too much government regulation, and stymie job growth and credit availability.

"This is the financial equivalent of Obamacare," said Rep. Spencer Bachus, R-Ala., referring to the health care reform measure passed earlier this year.

Democrats won't make their self-imposed deadline of passing the bill by July 4, due to a delay in finding a different way to pay the $19 billion tab for the measure and Senate commemoration of the late Sen. Robert Byrd, D-W. Va.

On Tuesday, Democratic leaders agreed to pay for the bill by hiking the premiums big banks pay for FDIC insurance on commercial deposits and ending the Troubled Asset Relief Program (TARP) - which aided failing banks, insurers and auto firms - a few months early.

That plan replaced what was already in the bill - assessing big banks and hedge funds - because key moderate Senate Republicans, especially Sen. Scott Brown, R-Mass., didn't like the idea of passing a new "tax." The assessment had been tacked on in the final hours of a grueling 20-hour negotiating session last week.

Senate Democrats need Brown and a few other moderate Republicans to get the 60 votes needed to end any filibuster against the measure. The death of Sen. Byrd on Monday and opposition by Sen. Russell Feingold, D-Wis., leaves the Democrats with a maximum of 57 votes toward passage.

In a statement Wednesday, Brown suggested he was pleased that the bill no longer taxed banks. But he stopped short of endorsing the bill, adding he'd review it over the recess.

Another moderate Republican, Sen. Susan Collins, R-Maine, said Wednesday the change made her "inclined to support" the bill. Collins was one of four Republicans who voted for the Senate version of the reform bill in May.

The Wall Street reform bill spends money by creating a couple of new federal agencies. Ensuring the bill doesn't add to the already ballooning federal deficits was integral to winning conservative Democrats in the House.

President Obama on Wednesday criticized Republicans voting against the bill during a town hall meeting on the economy in Racine, Wis., calling them "out of touch with the struggles facing the American people."

The bill's passage is a major victory for the White House, although many of the toughest provisions were weakened over the past month.

For example, measures that would prevented large banks that take commercial deposits from owning hedge funds now has a loophole allowing limited risky investments. And auto dealers will not face increased oversight for auto loans they issue.

Still, consumer advocates maintained that the bill was a victory for Main Street and consumers.

-- CNN Congressional Producer Ted Barrett contributed to this report