December 11, 2009
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U.S. House Approves Wall Street Reform, Pt.1
Slim vote is all they needed.The United States House of Representatives passed new legislation that will create a new agency to enforce and protect consumers from credit card companies trying to evade new credit card reform legislation. The establishment of the Consumer Financial Protection Agency (CFPA) is part of the new legislation that will have the power to monitor and enforce the new credit card reform act that President Obama signed into law last May. The new law titled the Wall Street Reform and Consumer Protection Act was passed by a slim vote of 223-202. President Obama is a strong advocate of the law that has the financial industry and the U.S. Chamber of Commerce, the nation's largest business federation, in an uproar.
Several amendments held the bill up until a compromise was met. Eliminated from the final bill was an amendment opposed by the credit card and financial industry that would let bankruptcy judges extend repayment periods, reduce interest rates and cut the principal on mortgages to avoid foreclosure. However, financial organizations and others strongly opposed the CFPA which will give the agency what same believe very powerful authority and allow it to write rules under all existing laws including the Truth in Lending Act and the Equal Credit Opportunity Act. The agency will have authority over all organizations in the financial industry including credit card companies, banks, credit unions, thrifts, as well as non-bank financial institutions.
Although the act is aimed to protect consumers and give them the same protections regardless of what credit card or financial company it does business with, the U.S. Chamber of Commerce believes that the new law will create extensive legal uncertainty and be a disruption to the financial industry. Also opposed to the law is the American Bankers Association. The association believes that the bill will significantly impact state and local laws and expects the vast power of the new agency will place undeserved burdens on banks that were not among those that exercised poor judgment in making subprime loans.