H.R. 4173 Update

Our friends at AFR (Americans for Financial Reform) are doing their best to track the hundreds of amendments which have been submitted to alter the Wall Street Reform and Consumer Protection Act.

Four of these amendments deserve special mention.  Two are especially good, and two are especially bad. Here are the details on all four, courtesy of AFR:

• We OPPOSE the Minnick amendment to eliminate a new Consumer Financial Protection Agency (CFPA) from the bill. It would leave enforcement of consumer protection and civil rights laws in the hands of the same existing regulatory bodies that resoundingly failed to use them.
• We OPPOSE the Bean et al. amendment on state preemption. It would prevent state attorneys general from enforcing the law or state legislatures from enacting new laws that apply to national banks or their subsidiaries. Federal law should be a floor, not a ceiling, of protection.
• We SUPPORT the Hinchey amendment on derivatives so that states and individuals are not precluded from enforcing their rights under the law.
• We SUPPORT the Stupak/DeLauro/Larson/Van Hollen amendment on derivatives. Regulators must have the authority to ban abusive derivatives instruments rather than simply reporting them to Congress, and transactions which violate the law should be considered invalid.

H.R. 4173 could also be improved in ways not yet captured by any amendment.  For example:

• The bill provides systemic regulatory authority to the Board of Governors of the Federal Reserve without reforming the Federal Reserve System to remove the banks themselves from a role in overseeing the Federal Reserve’s regulatory staff. We need a fully public systemic risk regulator, either in the form of a separate agency as detailed in Chairman Dodd’s proposal or a reformed Federal Reserve.
• The proposed CFPA needs to have jurisdiction over the Community Reinvestment Act (CRA). Contrary to the remarkably uninformed smear campaign that has been waged against it by a handful of media pundits, the CRA is vital to fighting discriminatory, deceptive, and unsustainable lending practices in minority communities. But as is the case with other consumer protection and civil rights laws, CRA enforcement in recent years has been extremely weak, allowing a wide range of under-regulated, non-bank – and often predatory – lenders to fill the void. As such, we favor the approach taken by the President Obama and Chairman Dodd’s proposals with respect to the CRA.
• We would also support an amendment that gives the SEC authority to make the exemption from registration under the 1940 Act for private investment funds contingent upon such funds fulfilling requirements established by the SEC.