Members of the House today voted 223-202 to approve H.R. 4173, the Wall Street Reform and Consumer Protection Act of 2009.
The bill includes sections that will create a Federal Insurance Office and also have a major effect on bank regulation, securities regulation, derivatives trading, the rating agencies, and procedures for preventing and handling serious financial problems at financial institutions that are too big to fail.
A manager’s amendment approved Thursday, offered by House Financial Services Chairman Barney Frank, D-Mass., that would require states to adopt annuity suitability standards at least as strict as those in the annuity suitability model adopted by the National Association of Insurance Commissioners, Kansas City, Mo.
The manager’s amendment also would require a proposed Financial Services Oversight Council to use state law when resolving failing state-regulated insurers.
Another amendment, adopted today, would strike a provision subjecting investment advisors that are affiliated with broker-dealers to regulation by the Financial Industry Regulatory Authority.
The Consumer Federation of America, Washington, says the bill would require brokers who give investment advice to act in the best interests of their customers.
U.S. Treasury Secretary Timothy Geithner welcomed House passage of H.R. 4173 but indicated that changes may be in the works.
“As with any legislation of this scale and complexity, the administration looks forward to continuing its close work with Congress to strengthen key provisions as the legislation moves toward final passage,” Geithner says in a statement.
The CFA is praising bill provisions that would impose new disclosure requirements, conflict-of-interest rules and other rules on the rating agencies, but it says the derivatives regulation section lets too many trades escape the central clearing requirement.
An investor protection section of the bill would restrict use of mandatory arbitration clauses in brokerage contracts, the CFA says.
For earlier coverage of H.R. 4173, please see: