With health care reform and the nuclear summit out of their way, Congress and president Obama have moved on to their next hot-button issue – financial industry regulatory reform.

It’s no secret that Republicans are not fans of the current Senate proposal, introduced by Senate Banking Committee chairman Christopher J. Dodd. His proposal, among other provisions:

  • Creates a Consumer Financial Protection Bureau within the Federal Reserve.
  • Gives the new bureau broad powers to write rules, but limits its enforcement powers to banks and credit unions with assets of at least $10 billion; nonbank mortgage companies, including loan originators and servicers; and the largest nonbank financial companies.
  • Permits state attorneys general to sue violators of the new consumer rules.
  • Exempts certain categories of businesses, including retailers, accountants, real estate brokers, lawyers, and makers of modular homes, from the new agency’s oversight.
  • Preserves the federal ability to pre-empt tougher state consumer protection laws under certain circumstances.

The G.O.P. plans to block the overhaul on the grounds that it worsens the problems that caused the 2008 financial collapse and would only encourage new bailouts. Democrats accuse Republicans of trying to “prevent greater policing of Wall Street.”

In a blog post, Jen Psaki, the deputy White House communications director, claimed the Republican objections were without merit, writing, “The Senate bill explicitly mandates that a large financial firm that faces failure be allowed to fail.”

Since the Democrats are still in power, and there is significant voter pressure to do something about the powerful banking industry, it seems likely that some version of the Senate reform will pass. For now, we’ll have to sit it out and listen in on the debate.

What do you think about financial regulatory reform? Do you think there needs to be more of it, or less?

Heather Trese is the associate editor of the Agent’s Sales Journal.