On Thursday, the House Financial Services Committee approved its final version of the Consumer Financial Protection Agency Act of 2009 by a 39 to 29 vote....The bill (HR3126) will create a new federal agency to regulate consumer financial products. The bill summary indicates that the agency will still have some considerable powers, though two high profile portions were scrapped in committee. The requirement that companies offer a simple ("plain vanilla") version of their products and the ability of states to enact their own tougher regulations. Huffington Post reports:
The vote largely came down along party lines, with Reps. Walt Minnick of Idaho and Travis Childers of Mississippi the only Democrats to vote against the bill, while Rep. Mike Castle of Delaware was the only Republican to vote in support of it.
Democrats also compromised on a keystone reform that would have allowed tougher state laws to act in tandem with new federal regulation. Frank and the White House wanted states to have free rein to get as tough as they chose, while pro-business Democrats and Republicans sought to exempt large national banks from state standards.So much for states' rights.
Given the recent failures of regulation, I'm skeptical of attempts to prevent a repeat of the current crisis through additional regulation. On the other hand, perhaps regulation that focuses on products rather than on firms could prove to be one part of a revised, and more successful, regulatory regime.