WASHINGTON - Roughly 15 months after the global financial system teetered on the brink of implosion, the House yesterday began debating the most sweeping rewrite of financial regulation since the Great Depression.
The House began considering 36 amendments, after House leaders whittled down the 200-plus offered for consideration. That's more amendments than were offered on the health-care legislation that moved through the House this year, and it speaks to the contentious nature of financial revisions.
Just this week, the House vote was uncertain as moderate Democrats threatened to withhold their support unless they got the chance to offer pro-business amendments. The Treasury Department and House Financial Services Committee Chairman Barney Frank (D., Mass.) agreed to give them more room to offer amendments.
Voting on the 36 amendments is to conclude today, followed by an expected vote on the broad Wall Street Reform and Consumer Protection Act of 2009 as amended.
Frank's legislation stitches together several regulatory bills that moved this year through the House Financial Services Committee and the House Agriculture Committee. The bills would:
Provide first-ever regulation for exotic financial instruments such as the insurancelike credit default swaps.
Abolish the Office of Thrift Supervision.
Create a Financial Services Oversight Council to police the financial system.
Create a Consumer Financial Protection Agency to regulate consumer credit products such as mortgages, payday loans, and credit cards.
Addressing one of the key failures in the recent financial crisis, the act also would create a Resolution Authority, a way of breaking apart failing institutions that are so large that their collapse threatens the broader financial system.
The big test for Frank and the Obama administration will come on the 34th amendment to be debated.
Conservative Democrats such as Rep. Heath Shuler of North Carolina, Rep. Walt Minnick of Idaho, and Rep. Travis Childers of Mississippi teamed up with moderate Republicans such as Rep. Michael Castle of Delaware and Rep. Aaron Schock of Illinois to offer an alternative to the Consumer Financial Protection Agency.
Financial giants such as Bank of America Corp. and the U.S. Chamber of Commerce, a lobbying heavyweight, have tried to kill the consumer panel. To that end, the bipartisan group of moderates is offering instead a Consumer Financial Protection Council.
It would be made up of 12 members, including most federal bank regulators, and would do much of what the Consumer Financial Protection Agency would do, but it would not create a stand-alone agency with new regulatory powers.