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US House passes sweeping financial overhaul

The House financial overhaul bill covers everything from financial giants to individual consumers. But lobbyists are lined up to fight it, and deals will have to be made with some lawmakers as the Senate considers its own bill.

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Freshman Rep. Walt Minnick (D) of Idaho proposed an amendment that would replace the CFPA with a Consumer Financial Protection Council of federal and state regulators from 12 existing agencies.

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The Congressional Budget Office has scored the total cost of my council at less than $50 million [over 10 years], compared with $4.6 billion for the proposed CFPA, he told House members during today’s floor debate.

“How many times are we going to create a massive new program to solve a problem?” he asked, citing big bills on climate change and a proposed public option in healthcare, before running out of time.

Speaking in opposition to the amendment, majority leader Steny Hoyer credited Minnick with being “an extremely able member of our body” and representing his district well. Handing responsibility for consumer protection to a council “made up of 12 existing regulators who have already demonstrated that they did not step up to the plate” would undo the bill’s goal to rein in abusive practices, he said. “I appreciate his bringing it up, but I disagree,” he said.

The amendment failed, 208-223, after an unusual 15-minute vote. Some 70 members waited for the last few minutes to cast their votes – typically a sign of a difficult vote with lots of consultation with party leaders. In the end, 33 Democrats, mainly members of the conservative Blue Dog caucus, voted with all Republicans to support the Minnick amendment. (Nineteen of these members also opposed party leaders on healthcare reform.)

Consumer groups hailed today’s House vote, especially the decision to back an independent agency focused on consumer protection.

“Overall this is a landmark step,” says Travis Plunkett, legislative director of the Consumer Federation of America. “One way to think about this is that the era of mindless deregulation is over, when one house of Congress passes broad legislation that imposes regulation on large financial institutions in the way that they treat consumers.”

Finance lobbyists won concessions of their own in the sprawling bill, but noted that the CFPA was a blow.

“Obviously dealing with a bill this big there are no total victories, but it was pretty good day,” says Stephen Verdier, chief lobbyist for the Independent Community Bankers Association of America. “The vote on the Minnick amendment sends a message to the Senate that the House is pretty evenly divided.”

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