US House Passes Historic Wall St. Reform Act

The US House of Representatives voted today to pass H.R. 4173, the Wall Street Reform and Consumer Protection Act of 2009. Sponsored by Barney Frank (D-MA), this bill would protect consumers and investors, provide for financial regulatory reform, and regulate the over-the-counter derivatives markets.

Passage of the Wall Street Reform and Consumer Protection Act was relatively close, with a final vote of 223-202, and falling nearly along party lines. The final tally can be seen on a national map at the New York Times. No Republican voted for the reform of Wall St., and 27 conservative Democrats joined them in voting no.

OpenCongress.org reports, “This is comprehensive legislation to overhaul regulations in the financial sector. It would establish a new Consumer Financial Protection Agency to regulate products like home mortgages, car loans and credit cards, give the Treasury Department new authority to place non-bank financial firms, like insurance companies into receivership and regulate the over-the-counter derivatives market.”

They go on, “Directs the Comptroller General to audit and report to Congress on all actions taken by the Board of Governors of the Federal Reserve System (Federal Reserve Board) and the Federal Reserve Banks during the current economic crisis pursuant to specified authority granted under the Federal Reserve Act. “

This is the most important financial overhaul in a long time. According to Americans for Fairness in Lending, one of the grassroots organizations that have been fighting for its passage, “It’s been a long road and the legislation has gone through many different stages and overcome several daunting challenges. Even today, damaging amendments that would have made reform impossible were defeated, leaving us with a bill we can all be proud of.”

The New York Times reported, “The bill’s principal provisions establish a process for dismantling large, failing financial institutions; set up a council to identify and regulate firms that are so big, interconnected or risky that they need heightened supervision to keep them from bringing down the whole financial system; create a new consumer financial-protection agency to squelch unfair and abusive practices; and for the first time, regulate over-the-counter derivatives markets. The bill also contains provisions on executive pay, investor protection, credit ratings, hedge funds and insurance.”

This reform effort was long overdue and many people thought it would never come. The financial collapse last year turned a recession into a near economic catastrophe, and there have been calls for stronger regulations since this time.