The House of Representatives has voted 223-202 in favor of H.R.4173, the Wall Street Reform and Consumer Protection Act of 2009.
As passed by the House, the bill creates a Consumer Financial Protection Agency and a Financial Stability Council, the latter of which would identify systemically risky institutions. The bill also creates a $150 billion fund that would be used to wind down firms deemed ‘too big to fail.’ The fund would supported by financial institutions and is seen by proponents as an alternative to future taxpayer bailouts.
H.R.4173 additionally strengthens the Securities and Exchange Commission's regulatory power, calls for regulation of the over-the-counter derivatives marketplace and requires the registration of hedge funds. The bill also keeps a risk-retention provision that is strongly opposed by mortgage bankers.
"Regrettably, the House moved forward and passed a bill that could adversely impact borrowers and lenders alike," Mortgage Bankers Association (MBA) Chairman Robert E. 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.
"And, the risk-retention provisions in the bill could make unsustainable the business models of hundreds of non-depository, independent mortgage banking firms that offer up more than a quarter of the mortgages made in this country today. On top of that, depository institutions will have to restrain their lending to meet the new requirements."
A bankruptcy cramdown amendment offered by Rep. John Conyers Jr., D-Mich., and lobbied against by the banking industry was defeated.
Treasury Secretary Tim Geithner applauded the passage, saying it "moves us an important step closer to meeting the president's objectives for reform."
"As with any legislation of this scale and complexity, the administration looks forward to continuing its close work with Congress to strengthen key provisions as the legislation moves toward final passage," Geithner stated.