by Dan Crowley, Karishma Shah Page, Bruce Heiman, Collins
R. Clark and Justin D. Holman
On December 11, the
House of Representatives passed H.R. 4173, the Wall Street Reform and Consumer
Protection Act of 2009 (see H.R. 4173 as introduced), by a vote of 223 to 203.
Twenty-seven Democrats voted against the bill and no Republicans voted in favor
of the bill.
House passage came quickly after the House Financial Services Committee
("HFSC") reported the last bills in the regulatory reform package on
December 2. Over 240 amendments were filed with the House Rules Committee ahead
of Floor consideration (see Rules and Committee Reports). Nearly 60 of the
amendments were incorporated into the Manager's Amendment and 35 of the
amendments were considered on the Floor.
The legislation would create a Financial Services Oversight Council ("FSOC"),
which would be responsible for identifying and regulating systemic risk. The
FSOC and the Federal Reserve would be jointly responsible for imposing higher
regulatory and capital standards on financial institutions identified as posing
a systemic risk. Several amendments were filed pertaining to H.R. 4173's more
controversial systemic risk provisions; the amendments, however, were not
included in the rule governing the Floor debate and amendment of the bill. In
the bill as passed, the FSOC would have the authority, in certain cases of
serious systemic risks, to limit the size of and dismantle financial
institutions. Additionally, the legislation would establish an enhanced
authority for the Federal Deposit Insurance Corporation ("FDIC") to
resolve failing financial institutions that pose a systemic risk. The
legislation would create a $150 billion resolution fund, which would be funded
by an assessment on financial firms with at least $50 billion in assets.
Consumer Financial Protection Agency
The legislation would create a Consumer Financial Protection Agency
("CFPA") to protect consumers from unfair and abusive financial
products and services. The Manager's Amendment, which was adopted, included
provisions that clarified the authority of the CFPA. Specifically, the bill as
passed would prohibit the CFPA from exercising authority over merchants,
retailers, and sellers of non-financial services. Additionally, the bill as
passed would clarify that the CFPA would only be able to issue product-specific
rules for non-bank products.
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Dan Crowley is a
partner in the firm's Washington, D.C. office. His practice is focused on
public policy issues relating to financial services and capital markets. He
also provides research on public policy matters to institutional investors.
Bruce Heiman engages in a wide
ranging federal counseling and lobbying practice. He has represented leading
companies and trade associations in technology, trade, postal, financial
services, transportation and manufacturing industries. He is one of two
Practice Area Leaders of K&L Gates' Policy and Regulatory Practice and
serves on the firm's Management Committee.
Karishma Shah Page is an associate
in the Washington, D.C. office of K&L Gates. Ms. Page concentrates her
practice on federal policy and legislative affairs, focusing on tax and
Collins R. Clark is an associate in
the Washington, D.C. office of K&L Gates. He works in the investment
management practice group, advising depository institutions, trust companies,
and other financial institutions. He also works on public policy issues
relating to the financial services industry and assists with immigration
Justin D. Holman is an associate in
the Washington, D.C. office of K&L Gates. Mr. Holman practices in the area
of investment management, primarily focusing on open and closed-end registered
funds, investment advisers, hedge funds and other private funds. Mr. Holman
also works on federal financial services public policy issues, with a
particular emphasis on derivatives, hedge funds and private equity funds.