DAVID LAWDER --- Reuters
With the threat looming of a midnight government shutdown, the fate of a $1.1 trillion U.S. spending bill was thrust into doubt on Thursday by Democratic objections over a provision to roll back part of the Dodd-Frank financial reform law.
A vote on final passage of the bill was set for Thursday afternoon, and House Speaker John Boehner predicted passage.
But the measure barely cleared a procedural hurdle as both liberal Democrats and conservative Republicans urged their colleagues to oppose it.
Current spending authority for federal agencies expires at midnight on Thursday, so the House is also planning to pass a two-day extension to avoid a shutdown and allow more time for Senate passage, Republican aides said.
The 1,603-page funding package, negotiated by Republican and Democratic appropriators and leaders in both chambers, looked to be cruising toward passage until full details were disclosed on Tuesday night.
Liberals, led by Senator Elizabeth Warren of Massachusetts, were livid that it included a provision that kills planned restrictions on derivatives trading by large banks, allowing them to continue trading swaps and futures in units that benefit from federal deposit insurance and Federal Reserve loans.
The Obama administration views the restriction, due to go into effect next year, as a pillar of the financial reforms enacted after the financial crisis, which was triggered by a collapse in complex mortgage derivatives.
"We think that's wrong" Treasury Secretary Jack Lew told CNBC of the roll-back provision in the spending bill. However, both Lew and the White House stopped well short of issuing a veto threat against the measure.