HARTFORD, Dec. 11 – The new financial reform legislation passed by the House of Representatives on Friday is an important step towards protecting consumers and taxpayers from reckless financial practices, according to the Connecticut Public Interest Research Group, a statewide consumer organization.
The Wall Street Reform and Consumer Protection Act, H.R. 4173, approved 223-202, establishes a new independent Consumer Financial Protection Agency (CFPA) which will prevent banks from getting “too-big-to-fail” and then needing massive taxpayer bailouts, will provide new oversight for the Federal Reserve and will set limits on hedge funds and other largely unregulated players.
“The House has taken critical steps to protect consumers and taxpayers from another financial collapse brought on by reckless and predatory practices and a regulatory system that failed,” said Ed Mierzwinski, U.S. PIRG’s Consumer Protection Director on Friday.
“Defeat of the banks’ efforts to get rid of the game-changer Consumer Financial Protection Agency was a key vote,” he said, but he noted that the Senate version of the bill needs to be strengthened.
“We need to ensure that derivatives are traded in the open. Hidden trading was a key factor in escalating the economic crisis,” the Mierzwinski explained.
Mierzwinski’s colleague, Tax and Budget Analyst Nicole Tichon, also applauded the House vote.
“No longer will the Federal Reserve operate as an arrogant, secretive government unto itself,” Tichon said. “By including legislation that would assure more transparency at the Fed, lawmakers stood up for the taxpayers, not for backdoor bailouts and big banks.”
“The public is angry about the mess created by Wall Street and bailouts they took,” added Gary Kalman, federal lobbying office director for U.S. PIRG. “This bill takes major steps towards reining in the dangerous and deceptive practices that got us into the crisis.”
Financial industry groups opposed many aspects of H.R. 4173, and their lobbying and work behind the scenes left their marks on the bill. U.S. PIRG and its allies in the Americans for Financial Reform coalition are convinced that they will have to work hard to assure the interests of Main Street trump Wall Street in the final version of financial reform legislation.
For example, Mierzwinski noted, the banks were able to weaken the CFPA in several ways, especially by forcing through a modified version of an amendment to preserve the preemption of some state legislative and attorney general authority over national banks by reinstating federal law as a floor, not ceiling of protection.
