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Pelosi: I Support Strong Volcker Rule, Senate Derivatives Title

Fielding questions with progressive bloggers, House Speaker Nancy Pelosi told FDL News that she personally supports two key measures of the Wall Street reform package that reformers will fight for in conference, and that the House conferees on the bill will have a goal of seeing the most progressive legislation possible come forward, even if that contrasts with the bill their own chamber passed last December.

Pelosi said that she supports a strong iteration of the Volcker rule, which would ban proprietary trading by deposit-taking banks. The House bill allows for such a rule to potentially be considered, while the Senate bill requires some sort of Volcker rule be put into action, but leaves the details to the discretion of regulators. Senate Democrats like Jeff Merkley and Carl Levin have pushed for an even more concrete Volcker rule than what currently exists in either version to be included in the bill, and the White House has nominally supported a strong Volcker rule as well. Speaker Pelosi actually seemed surprised by that last fact, telling FDL News “I didn’t know the White House is pushing the Volcker rule, are they… I’m glad to hear it?”

The Speaker also expressed support for another major provision, the derivatives title of the Senate bill authored by Sen. Blanche Lincoln, including the measure to spin-off the big banks’ lucrative swaps trading desks. She said that, while she “didn’t know” where the White House is on derivatives (they’re against the trading desks provision), she sees “a lot of enthusiasm for Sen. Lincoln’s proposal among some in the House.” She even said that some members of the House Agriculture Committee, which created a fairly poor derivatives title for the House bill, support the Lincoln bill, including the spin-off proposal. Pelosi said that ultimately, Collin Peterson, the Blue Dog chair of the Ag Committee, will have a lot of responsibility over that area of the bill, but that Barney Frank, who has been outspoken on the need to strengthen the derivatives title beyond what was in the House bill, would act as chair as the controlling authority. “I have great confidence in Barney,” Speaker Pelosi said.

The goal, Speaker Pelosi said, was to “see the most progressive legislation to protect the American people from the recklessness and the exposure” given by Wall Street. “Some on Wall Street believe that you privatize the gain and nationalize the risk. This is a terrible price for the taxpayer to pay, in terms of jobs, savings, homeownership, pensions. So the conference will be open and we will have an interesting debate on these issues.”

Speaker Pelosi fielded questions on the recent jobs legislation that passed the House late last week, saying that there was no appetite in Congress for a bill in that size, and that necessitated the scale-back, cutting away FMAP assistance for the states and the COBRA subsidy for the jobless. She promised to take up the Medicaid portion, which wouldn’t kick in until next January, in a future bill, as well as trying to take up COBRA again (that subsidy expires this week). “We have a changed climate in terms of the size of spending,” she said, reflecting the fiscal conservatism that appears to be driving debates in Washington in a time of mass joblessness. Even though Pelosi strongly defended the need for job creation measures and soundly criticized cutbacks in areas like education, she added that the deficit should be an issue for progressives because funding debt service means that “money goes down the rathole.” She said that the Senate would take up the job legislation as soon as they came back into session.

Pelosi acknowledged and even praised the role of progressives in impatiently arguing for further structural changes to policy, saying that before she came to Congress, “I was relentless, persistent, dissatisfied,” and that such a posture is a good role for people to play.

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David Dayen

David Dayen