See also Current legislation.
HR 4173 legislation
Will be considered on the House floor today, December 10th.
The legislation incorporates nine major pieces of legislation approved by the Committee to address the myriad causes – from predatory lending to unregulated derivatives – that led to last year’s meltdown.
The Wall Street Reform and Consumer Protection Act includes the following provisions:
- Consumer Protections: Creates the Consumer Financial Protection Agency (CFPA), a new, independent federal agency solely devoted to protecting Americans from unfair and abusive financial products and services.
- Financial Stability Council: Creates an inter-agency oversight council that will identify and regulate financial firms that are so large, interconnected, or risky that their collapse would put the entire financial system at risk. These systemically risky firms will be subject to heightened oversight, standards, and regulation.
- Dissolution Authority and Ending “Too Big to Fail”: Establishes an orderly process for dismantling large, failing financial institutions like AIG or Lehman Brothers in a way that ends bailouts, protects taxpayers, and prevents contagion to the rest of the financial system.
- Executive compensation: Gives shareholders a “say on pay” – an advisory vote on pay practices including executive compensation and golden parachutes. It also enables regulators to ban inappropriate or imprudently risky compensation practices, and it requires financial firms to disclose any compensation structures that include incentive-based elements.
- Investor protections: Strengthens the SEC’s powers so that it can better protect investors and regulate the nation’s securities markets. It responds to the failures to detect the Madoff and Stanford Financial frauds by ordering a study of the entire securities industry that will identify needed reforms and force the SEC and other entities to further improve investor protection.
- Regulation of Derivatives: Regulates, for the first time ever, the over-the-counter (OTC) derivatives marketplace. Under the bill, all standardized swap transactions between dealers and “major swap participants” would have to be cleared and traded on an exchange or electronic platform. The bill defines a major swap participant as anyone that maintains a substantial net position in swaps, exclusive of hedging for commercial risk, or whose positions create such significant exposure to others that it requires monitoring.
- Mortgage Reform and Anti-Predatory Lending: Would incorporate the tough mortgage reform and anti-predatory lending bill the House passed earlier this year. The legislation outlaws many of the egregious industry practices that marked the subprime lending boom, and it would ensure that mortgage lenders make loans that benefit the consumer. It would establish a simple standard for all home loans: institutions must ensure that borrowers can repay the loans they are sold.
- Reform of Credit rating agencies: Addresses the role that credit rating agencies played in the economic crisis, and takes strong steps to reduce conflicts of interest, reduce market reliance on credit rating agencies, and impose a liability standard on the agencies.
- Hedge fund, Private Equity and Private Pools of Capital Registration: Fills a regulatory hole that allows hedge funds and their advisors to escape any and all regulation. This bill requires almost all advisers to private pools of capital to register with the SEC, and they will be subject to systemic risk regulation by the Financial Stability regulator.
- Office of Insurance: Creates a Federal Insurance Office that will monitor all aspects of the insurance industry, including identifying issues or gaps in the regulation of insurers that could contribute to a systemic crisis and undermine the entire financial system.
Republicans offer substitute to HR 4173
- Source: Republican Response to the Worst Financial Meltdown since the Great Depression: “What, There’s a Problem?” House Financial Services Committee, December 10, 2009
For eight years, President Bush and his Republican allies looked the other way as Wall Street and big banks exploited loopholes, ignored growing problems and, as a result, did not protect America’s families and small businesses. Even today, after millions of Americans have lost their jobs and taxpayers have been forced to bailout Wall Street, Republicans continue to deny that there is a problem. Instead, Republican leader John Boehner, Republican Whip Eric Cantor, and the rest of the Republican Party can be found on Capitol Hill begging Washington lobbyists to kill a bill that would finally bring accountability and integrity back to our financial system.
Now, the Republicans have offered a substitute bill, an alternative to H.R. 4173 that does virtually nothing to address the causes leading to last year’s financial crisis. In fact, the Republican “alternative” wholly rejects the notion that Wall Street should be held accountable or that consumers need more protections from deceptive banks and greedy lenders. If the Republican plan passes, it will mean business as usual on Wall Street, and it will increase the likelihood of more taxpayer bailouts.
- Summary of the Republican Substitute to H.R. 4173, the Wall Street Reform and Consumer Protection Act
Amendments to HR 4173
- Peterson/Frank amendment 115 Derivatives Markets Transparency and Accountability Act
House Dems reach deal after threats by centrists
- Source: House Dems reach deal on regulatory reform after threats by party centrists The Hill, December 9, 2009
House Democrats reached a deal on a thorny provision in financial overhaul legislation that held up debate on Wednesday, Rep. Barney Frank (D-Mass.) said.
Centrist Democrats, particularly the New Democrat coalition and Rep. Melissa Bean (D-Ill.), pushed strongly in support of an amendment that would limit the proposed Consumer Financial Protection Agency’s (CFPA) ability to override state regulations.
The issue of federal preemption dominated most of the back-room discussions on Wednesday between congressional leaders and senior administration officials, including Neal Wolin, the second-ranking officer at Treasury.
Negotiators said they reached a middle ground on the preemption issue, which will be inserted in the final revision, called a "manager's amendment." In addition, New Dems say they've been promised a floor vote on a centrist amendment loosening the rules on derivatives.
- Disaster and Denial New York Times, December 13, 2009
- Conservatives replaced Bachus in the lead on regulatory overhaul The Hill, December 13, 2009
- U.S. House poised to back financial rules overhaul Reuters, December 11, 2009
- House steps closer to passing financial regulation overhaul Washington Post, December 11, 2009
- House Democrat Ed Permlutter Has Lots Of Reasons To Support Big Banks Huff Post, Dec. 11, 2009
- Democrats Defend Bill to Rein in Wall Street New York Times, December 10, 2009
- US House tackling historic financial reforms Reuters, Dec 10, 2009
- Bill aimed at taming Wall Street could be declawed AP, December 7, 2009
- House likely to move on regulatory reform by end of the week The Hill, December 6, 2009
- CBO: Financial overhaul would hike deficit by $4.5 billion The Hill.com, December 4, 2009