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Financial bill to rein in Wall Street. Will it be tough enough?

Regulations in a House financial bill would mean the most significant overhaul of the financial-services industry since the New Deal.

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"We’re facing a fierce fight,” says Ed Mierzwinski, consumer advocate for US PIRG. “What’s astonishing to me is that the special interests opposing us contributed to the failure of the financial system. They’re trying to preserve the system that failed, and Congress is listening
to them in some respects.”

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Topping even the healthcare industry, finance groups have spent an unprecedented $3.8 billion on lobbying since 1998, according to the Center for Responsive Politics in Washington. At $78 million this year alone, the sector has directed more campaign funding to federal candidates and party committees than any other sector.

Impact on jobs

The US Chamber of Commerce, a key player on both healthcare and financial regulation, applauds the House Finance Committee for doing more to monitor systemic risk. But they warn that too heavy a regulatory hand could stifle jobs

“Something missing from this debate on financial regulatory reform is that the capital markets are the fuel that is used by the engines of job creation,” says Thomas Quaadman, executive director for financial reporting policy and investor opportunity at the US Chamber’s Center for Capital Markets Competitiveness. “If we create regulatory schemes that force capital markets to underperform, their job creation function will lag and that will create serious implications for years to come.”

Nor are groups on the left satisfied with the balance struck in the Financial Services panel bill. The Financial Stability Improvement Act passed today on a party-line vote, 31 to 27. But 10 members of the Congressional Black Caucus on the panel, all Democrats, boycotted the vote in a bid to focus attention on the unmet needs of minority communities.

“Since last September, we have continuously voted for bailouts and reform for the very institutions that created this devastation, without properly protecting the African American community, or small business. That stops today,” said Rep. Maxine Waters (D) of California, in a press briefing after the vote.

With the Senate caught up in a healthcare debate until the new year, the action on financial regulation is in the House. Senate Banking Committee chairman Christopher Dodd (D) of Connecticut released a draft proposal for financial regulation, but this week set up bipartisan working groups to take another run at it.

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