The new financial reform legislation passed by the House of Representatives on Friday December 11th is an important step towards protecting consumers and taxpayers from reckless financial practices. The Wall Street Reform and Consumer Protection Act, H.R. 4173, approved by a vote of 223-202, establishes a new independent Consumer Financial Protection Agency (CFPA), reins in the ability for banks and investment firms to get “too-big-to-fail” and then needing massive taxpayer bailouts, opens, for the first time, the Federal Reserve to public oversight, and creates accountability for hedge funds and other previously unregulated players that were central causes of the economic meltdown one year ago. “The House has taken critical steps to protect consumers and taxpayers from another financial collapse brought on by reckless and predatory practices and a regulatory system that failed,” said Ed Mierzwinski, U.S. PIRG’s Consumer Protection Director on Friday. “Defeat of the banks’ efforts to get rid of the game-changing Consumer Financial Protection Agency was a key vote,” he said. Financial industry groups opposed many aspects of H.R. 4173, and their lobbying and work behind the scenes left some of their marks on the bill. U.S. PIRG and its allies in the Americans for Financial Reform coalition will have to work hard to assure the interests of Main Street trump Wall Street in the final version of financial reform legislation as it makes its way through the U.S. Senate. For example, Mierzwinski noted, the banks were able to weaken the CFPA to preserve the preemption of some state legislative and attorney general authority over national banks by reinstating federal law as a floor, not ceiling of protection. U.S. PIRG and allies will also work to strengthen the oversight and accountability of speculative trading in derivatives.
