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Friday, December 11, 2009 US House Approves Legislation To Overhaul Wall Street
WASHINGTON - U.S. House lawmakers Friday approved legislation that would make historic changes to the government's oversight of U.S. financial markets and would revolutionize the way businesses and consumers deal with financial products. A year after a cataclysmic financial crisis threatened to take down world economies, House lawmakers voted 223-202 to pass the largest overhaul of securities laws since the New Deal, The Wall Street Journal reported. The package of regulatory changes would give regulators broad new authority to identify and respond to systemic risks, break up or wind down the riskiest firms, and crack down on abusive lending practices. The vote is the result of months of debate, negotiations and lobbying and is a legislative victory for the Obama administration, which has made changing the rules for Wall Street a centerpiece of its economic policy agenda. The action now moves to the Senate, where lawmakers are moving a parallel piece of legislation. Capitol Hill aides have said the chance of a bill becoming law in the first half of 2010 appear to have improved just in the last few days. If enacted, the bill would transform the landscape for everything from the largest mega-banks to the smallest mortgage lenders. Firms that offer credit cards, home loans and other products to consumers would face scrutiny from a new Consumer Financial Protection Agency, while hedge funds and other private pools of capital would for the first time be required to register with the Securities and Exchange Commission. "The cost of not having a referee on the field skews the game," House Majority Leader Steny Hoyer (D, Md.) said during floor debate Friday. "We want to make sure the game is fair." The most significant effect would be on the largest financial institutions, which would face intense new scrutiny on their operations and would be held to higher capital and liquidity standards. The government would be allowed to break up even healthy large institutions that were deemed a threat to the broader economy, and for the first time would be able to handle the failure of a large financial-services firm. Treasury Secretary Timothy Geithner praised lawmakers following the vote, stressing the need for "clear rules of the road" for financial markets. "House passage of this bill moves us an important step closer to meeting the president's objectives for reform," Geithner said in a statement released by the Treasury. Friday's vote came after three days of contentious debate between Democrats and Republicans over the role of the government in financial markets. GOP lawmakers repeatedly accused the majority of creating vast new government bureaucracies, while Democrats said Republicans were offering little or no response to last year's financial tumult. No Republicans ended up supporting the legislation, and 27 Democrats voted against the package. In all, lawmakers considered more than 30 amendments to the legislation during floor debate, partially moderating the measure by approving changes sought by business groups. These included effectively preserving the federal government's right to pre-empt state laws in some circumstances, voting down a proposal to allow bankruptcy judges to adjust the terms of first mortgages, and exempting smaller banks and credit unions from having to pay for the cost of a large firm failing.
Author: Staff Writer Source: The Wall Street Journal
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