The full House approved by a vote of 223 to 202 today, December 11, the sweeping financial services reform bill, the Wall Street Reform and Consumer Protection Act (H.R. 4173). The bill includes reforms such as creating the Consumer Financial Protection Agency (CFPA) and a new Federal Insurance Office, granting broad new government powers over large financial institutions that pose a systemic risk, tighter controls of the capital markets, as well as derivatives reform, mortgage reform, and new oversight of credit ratings agencies.
The provision within the reform bill that would have given FINRA the authority to inspect and regulate any investment advisor associated with a broker/dealer was successfully deleted from the huge financial services reform bill in the early morning of December 11.
Rep. Barney Frank (D-Massachusetts), chairman of the House Financial Services Committee, along with Rep. Steve Cohen (D-Tennessee) asked that the FINRA amendment–which was originally proposed by Rep. Spencer Baucus (R-Alabama)–be deleted. Baucus said during the House floor debate that he proposed the amendment post the Bernie Madoff Ponzi scheme, and felt it was necessary because the SEC failed to properly examine Madoff’s firm. Baucus did say, however, that he would agree to strike the Finra provision to the financial services bill at this time and explore other remedies. Frank responded that he agreed with Baucus’s concerns, but was swayed by concerns expressed by the Texas Securities Administrator that the provision would delegate too much authority to Finra.