The House passed sweeping financial regulation that some say is as revolutionary as Franklin Roosevelt’s New Deal. Free-market business advocates aren’t too happy about the Wall Street Reform and Consumer Protection Act, which ushers in a bevy of new government regulation and control.
The package creates a new business oversight body, the Consumer Financial Protection Agency, which was subject to the fiercest fights in the House during debate. CFPA opposed by the Chamber of Commerce for increasing government regulation and stifling growth. Republicans and moderate Democrats almost killed the measure with a substitute amendment, which was authored by Representative Walt Minnick, (D-Id.).
“While there are positive elements, they are significantly outweighed by provisions that will only magnify and exacerbate flaws within the existing regulatory structure and hamper the growth of the economy,” said the Chamber, in a statement.
Consumer groups say the CFPA is necessary to protect consumers from the types of deceitful practices that led to the housing market crash.
Another child birthed from the belly of this regulation package is a new council that can ferret out “risky” financial institutions. It writes this council a blank check for $150 billion to close up institutions that should be put to death.
Republicans charged that such a sum would amount to an additional bailout, but House Financial Services Chairman Barney Frank (D-Mass.), insisted that it was simply enough for closing up their shops.
“The bailouts of AIG and Bear Stearns, not possible, illegal under this bill. If a company fails, it will be put to death,” he said. “We will spend money to get rid of them in ways that will minimize damage, money that will come from the financial community.”
But the fund would be established by fees on big financial institutions, who would undoubtedly pass on that cost to consumers – amounting to a tax.
Notably, Rep. Ron Paul’s push to audit the Federal Reserve was included as part of the bill. The measure is controversial, but has attracted a strong following in Congress. The bill also strengthens the Securities and Exchange Commission, derivatives, hedge funds, and mortgages.
“Regrettably, the House moved forward and passed a bill that could adversely impact borrowers and lenders alike,” Mortgage Bankers Association Chairman Robert Story Jr. said in a statement Friday. “By not creating a uniform, national regulatory standard, the bill continues the conflicting and confusing patchwork of state and local laws that result in increased costs for borrowers.”
The measure faces increased scrutiny in the Senate, but is expected to pass after review.