Consumer Protection Agency One Step Closer To Reality
New legislation passed by the House of Representatives, the Wall Street Reform and Consumer Protection Act, would give the government new powers to break up companies that threaten the national economy. The Federal regulatory restructuring would require the creation of a new agency that will be responsible for overseeing consumer banking and rein in shady financial market tactics. The vote for this new legislation was divided among party lines 223 to 202, with no republican support and 27 dissenting democrats.
Republicans called the bill a burden to business and argued that it would continue to protect companies considered too big to fail. The republicans offered an alternative which called for special bankruptcy proceedings to dismantle failing financial institutions, this failed to gain support. Democrats pointed out the republican support for big business saying, the republicans are doing the bidding of big banks, referencing a meeting in the Capitol Visitors Center this week between GOP leaders and nearly 100 lobbyists in the financial as well as the health insurance sector.
This bill would create a financial oversight committee, its members would include the Treasury Secretary, the Federal Reserve Chairman and heads of predetermined regulatory agencies.
In addition to the responsibilities the agency will already have, it will also oversee and identify firms and activities that will be subject to higher economic standards, this includes the requirement for more money being placed in the Federal Reserve. The government could dismantle any unhealthy firm if it poses a risk to the financial economy. Large firms who hold more than $50 billion in assets, including hedge funds with more than 10 billion in assets, would pay into a $150 billion resolution fund. This would cover the cost of dismantling such a large company.
Before the agency can become a permanent reality, the draft legislation of the bill will need to win approval in the senate banking committee. The senate bill is expected to reach the senate floor in early 2010.
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