Today the House passed H.R. 4173: Wall Street Reform and Consumer Protection Act of 2009. The vote was 223 to 202 with 27 Democrats joining all of the Republicans in a no vote.
The actual bill is in the Congressional Record, with the latest Congressional actions (not real time).
The House allowed 36 amendments for debate, which severely limits the real number of amendments up for consideration. It appeared to be a strategic move to block the flurry of Republican amendments.
See this post on two amendments to gut the bill.
Earlier this morning, House Speaker Nancy Pelosi posted the latest legislative actiion with the bill summary and the latest selling points on the bill.
Below are some questions which will be updated as we read and find critiques, with the actual legislative language.
Bear in mind Congress loves to change language at the last minute, bills at the last minute. As information is found this post will be updated.
The Huffington Post has a chart outlining some existing loopholes, but I'm not sure this is in real time. (it's pretty difficult to digest a 240 page amendment in 5 minutes, so please read the legislative text and comment).
The Wonkroom over at Think Progress is now blogging the floor proceedings and amendments for additional info.
Questions on the what's really in the bill:
1. Does the Bill create a permanent bail out?
Currently that answer is no and that was done through a host of amendments while the bill was in committee. This post by ZeroHedge is wrong, using old information.
What specifically they are referring to is p. 397 in the bill and it's establishment of a Systemic Dissolution Fund. This fund is for the winding down of an institution that needs to fail. The issue is whether this is a permanent bail out fund, on the U.S. taxpayers. The current claims are it dumps the financial responsibility on the large financial institutions themselves. From the bill:
(ii) to ensure that any taxpayer funds utilized to facilitate such liquidations are fully repaid from assessments levied on financial companies that have assets of $50,000,000,000, adjusted for inflation, or more.
This $50 billion threshold is adjusted yearly. It also covers hedge funds greater than $10 billion. It has a cap on scaled fee assessments of $150 billion. It does allow for borrowing from the U.S. Treasury but caps it at $150 billion and stipulates that the money is only for dissolution of the corporation.
2. Has "Rep." Melissa Bean Gutted the Consumer Financial Protection Agency?
PRWatch claims yes:
Big bank defenders, led by Melissa Bean (D-IL), got language into the bill that would allow federal laws governing consumer protection to preempt many of those set by individual states and make it harder for state Attorneys General to enforce consumer protections.
Generally, since details change and are confusing, one can call their representatives and just demand anything from Melissa Bean be ripped out of the final bill. She is a notorious corporate lobbyist tool, so you've got your bases covered by just saying reject pretty much any amendments she presents.
Unfortunately Corporate Bean's attempts to gut consumer financial protections is in the Frank manager's amendment (attached).
3. Are mortgage cram downs in the bill?
No as Bloomberg reports. A explicit amendment was voted down which had a provision to allow bankruptcy judges to finally reduce principle, fees, interest rates. Pretty damn stupid isn't it? We have 3.9 million foreclosures this year. Hell, don't want to hurt those banks profits by stopping them from kicking out widows, children and families out into the cold. We'll just ignore the long term damage the foreclosure tsunami bring to citizens, local, state governments, communities, the middle class and macroeconomic growth. (Sorry, I digress but this complex maze of legislative banks find your loophole cheese text is pathetic).
4. Was there an attempt to completely remove the Consumer Financial Products Agency Itself?
Yes, but the amendment failed, although watering down did pass. The amendment was by Minnick and it replaced the CFPA with some "Council" and is here and #35 in the above amendment list. This vote will determine just how much lobbyists are running this show.
Amendments that Passed
This section will be updated as votes can be determined. Note Barney Frank bundled additional amendments which passed by voice vote. Which amendments those are we did not catch in watching the floor proceedings yesterday. All other amendments (numbered list), failed beyond the below tally.
- Barney Frank's manager amendment(1) - passed
- Lynch's amendment (5) - passed
- Murphy, change definition of swap participant (6) - passed
- Peters amendment, take new dissolution fund to repay rest of TARP(13)- passed
- Schakowsky amendment, regulate reverse mortgages (32) - passed
What got through to gut/improve the bill
Since Melissa Bean's corporate lobbyist agenda to water down the CFPA was put into Frank's manager amendment it passed.
Would add the head of the CFPA to the Financial Services Oversight Council and clarifies that prudential standards promulgated under the Financial Stability Improvement Act of 2009 do not supersede state or federal consumer protection standards.
Also gave some nice loopholes to the CFPA:
Would provide an exemption for any retailers and other non-financial firms subject to the Consumer Financial Protection Agency Act
Also lowered the standard to sue credit ratings agencies. Now it's just gross negligence.
We also had a limit of financial institutions' ownership on OTC derivatives clearing houses. Limit to 20%.
Updates as Determined
I want to point to this post by William Greider on the funding of this "systemic dissolution fund" having access to the Fed discount window.
The crucial terms for Fed financing are set by an innocuous-sounding amendment offered by Representative Brad Miller of North Carolina. Any financial holding company designated as a "systemic risk" and subject to stricter regulatory standards "shall have the same access to the discount window lending of an appropriate Federal Reserve Bank as is available to a member bank of each Federal Reserve bank."
So far I have not found such an amendment. It's clear, at the last minute amendments have changed, it's unclear if sponsorship also has, so bear with us while we parse through the language to see if this is true, this bill creates a permanent bail out fund.
Most of the changes were in Rep. Barney Franks manager's amendments. According to this site, we have:
It would include a change sought by Rep. Brad Miller that would cut in half, to 10%, a haircut the FDIC could impose on secured creditors when resolving systemically significant firms. The provision was also narrowed to focus on short-term lending of 30 days or less and to carve-out federally backed credit including advances from the Federal Home Loan banks, Treasury securities and debt guaranteed by the government-sponsored enterprises.
On more power to the Federal Reserve, again from the manager's amendment:
The manager’s amendment would explicitly give the Fed the same power under the Bank Holding Company Act to prevent mergers, acquisitions or consolidation of non bank financial holding companies. It also adds language to clarify that prudential regulators have broad authority to require tougher standards on firms they regulate that pose a systemic risk.
and on the funds and power of the FDIC to wind down institutions, again in the manager's amendment:
The manager’s amendment makes several changes to a provision that would let the FDIC set up a debt guarantee program for solvent firms. It would cap that program at $500 billion and clarify that any special assessment needed to cover losses would only come from institutions that participated in the program. It would also permit the FDIC to require warrants for assistance provided. The manager’s amendment would also empower the FDIC to push a defaulting borrower into receivership or bankruptcy.
On the derivatives regulation loopholes, please read this post, Four "Drive your Truck through it" Loopholes in Dervatives Reform. I've managed to find two of the 4 loopholes mentioned in the legislative text to date, but the other 2 are probably in there (and maybe a few more that have not been discovered yet).
As we find more details this post will be updated.
Update: This Huffington Post article has a new YAL (yet another loophole). But notice the strategy. How can one have a formal discussion on the House floor, never voted on, yet somehow implies passage, just because a couple of corrupt lawmakers spelled out how they want to make sure the CFPA cannot regulate most financial institutions?
Perlmutter and Financial Services Committee Chairman Barney Frank engaged in a colloquy Thursday night -- a pre-scripted dialogue on the House floor -- so he could get the spirit of his loophole in the bill without actually having to have a vote.
It's now enshrined forever in the Congressional Record as Congress's intent -- a loophole for some of the nation's biggest banks to evade additional scrutiny of their consumer practices in the wake of the biggest economic crisis in 80 years, brought about in large measure because of the lack of adequate consumer protections.
YAL: Yet another loophole was amplified. All auto dealerships are exempt from the CFPA. This auto loan market is as large as credit cards and is completely exempt from any oversight, regulation.