Digital News Report – There is a growing movement against H.R. 4173, the Wall Street Reform and Consumer Protection Act of 2009, which was passed by the House of Representatives last year.
According to the “Stop the CFPA” group, the bill will create a huge bureaucracy that would regulate the financial industry. “These proposals simply grow the government through an agency with more authority than any other federal regulator, putting new restrictions on consumer access to products, reducing choices among products.” The bill would also drive up the cost of various financial services, according to a statement released by the group.
Proponents of the legislation say that the bill will close loopholes created by the Commodity Futures Modernization Act of 2000. It will create a Consumer Protection Agency (CFPA). Some senators, like Chris Dodd (D-Conn.), would like to see the agency created inside the Federal Reserve, a private central bank.
The agency would regulate financial firms in an effort to prevent another economic meltdown. They will be charged with dismantling failing companies like AIG and Lehman Brothers that are considered too big to fail.
The bill would also give the CFPA power to limit executive pay. It will also regulate hedge funds which are relatively unregulated today.
The Securities and Exchange Commission (SEC) would also have more power to regulated over-the-counter (OTC) derivatives. “Under the bill, all standardized swap transactions between dealers and “major swap participants” would have to be cleared and traded on an exchange or electronic platform,” the executive summary states.
The bill will also regulate the lending industry in an effort to prevent “predatory lending”. The intent it to make sure borrowers will be able to repay the loans.
A Federal Insurance Office would be created to monitor the industry. It would identify gaps in the regulations.
The bill is a sweeping piece of legislation that regulates various industries. This is the major complaint coming from the opposition. There are also concerns raised about the Federal Reserve taking the regulatory lead. The Fed is independent of the government (other than a board of governors).
The Senate is considering a similar package.
by: Mark Williams