Last night, after a dust-up between the New Democrats and House Financial Services Chairman Barney Frank (D-MA), the House of Representatives agreed on the rules for debate of H.R. 4173, the Wall Street Reform and Consumer Protection Act of 2009. The 253-177 vote (with all Republicans voting against) frees the bill up to come to the floor.
One results of the New Dems’ obstinance is the addition to the bill of a provision that would “broaden proposed powers of the Office of the Comptroller of the Currency to preempt state consumer protection laws for national banks” by lowering the threshold for preemption and allowing the OCC to apply its previous preemption decisions in new cases (instead of on a literal case-by-case basis). This is a troubling development.
The second concession wrung by the New Dems is to bring an amendment scrapping the proposed Consumer Financial Protection Agency (CFPA) to the floor. The CFPA is one of the most important facets of regulatory reform, and has been the target of an intense lobbying campaign from the Chamber of Commerce and the financial services industry, in cooperation with Republicans.
In a preview of what debate over the CFPA is liable to look like, Reps. Don Manzullo (R-IL) and Judy Biggert (R-IL) took to the House floor last night to claim that the CFPA’s powers will enable it to regulate churches, doctors, people writing checks for their mothers, and cockroach inspectors. Watch a compilation:
This strategy takes the Chamber of Commerce’s already ludicrous campaign claiming that the CFPA would regulate bakeries and grocery stores a step further. Of course, this effort is seriously undermined by Sec. 4205 of the actual legislation (pg. 760-762) which clearly lays out the “exclusion for merchants, retailers, and sellers of nonfinancial services”:
And thanks to the deal struck by the New Democrats, which called into question the necessity of the CFPA, we can look forward to much more of this nonsensical rhetoric as debate progresses.