House of Representatives Passes Measure to Tighten Federal Regulation of Wall Street

As we have seen over the past year, our financial system is broken and we can no longer afford to maintain the status quo.”

— Representative Ed Perlmutter

After three days of floor debate, the House voted 223 to 202 to approve the measure. It creates a new agency to oversee consumer lending, establishes new rules for transactions that contributed to the meltdown, and seeks to reduce the threat that one or two huge companies on the verge of collapse could bring down the economy.

The measure is central to lawmakers’ effort to end government rescues of firms deemed too big to fail, which led to last year’s bailouts of New York-based American International Group Inc. and Citigroup Inc. The banking industry, Republican lawmakers and the nation’s biggest business lobby are fighting to scale back the legislation.

The Wall Street Reform and Consumer Protection Act adopts priorities President Barack Obama outlined in June for strengthening financial rules. The bill lets regulators unwind failed systemically important firms, sets up a council to monitor for systemic risk and creates a $150 billion industry- backed fund for dissolving large failed firms. The bill ends a ban that shielded the Federal Reserve from audits of its monetary policy decisions.