December 11, 2009
House of Representatives Seal.png
On December 11, the House of Representatives passed the Wall Street Reform and Consumer Protection Act of 2009, H.R. 4173.  This legislation, backed by the Administration, consists of a set of measures intended to modernize financial regulatory controls and provide key protections for consumers.  The House Financial Services Committee published a press release with information about the bill this afternoon.
 
H.R. 4173:
  • Establishes the Consumer Financial Protection Agency, an independent agency tasked with preventing unfair and abusive financial products and services;
  • Creates a Systemic Dissolution Fund and establishes a process by which large, failing institutions will be dismantled;
  • Creates an interagency oversight council to identify risks and regulate large, complex companies that pose a risk to the larger financial system;    Places restrictions on executive compensation; and
  • Addresses derivatives, credit rating agencies, hedge funds, and the insurance industry.
 
The bill also incorporates language from the Mortgage Reform and Anti-Predatory Lending Act, H.R. 1728, which passed the House on a bipartisan vote this past spring, including language requiring that lenders ensure that borrowers have the ability to repay and prohibiting payments that incent mortgage brokers to steer borrowers into higher-cost loans.
 
The House accepted a number of housing-related amendments to H.R. 4173 during the floor debate, including the House Financial Services Committee Chairman Barney Frank’s (D-MA) manager’s amendment, which provides $3 billion in Troubled Asset Relief Program (TARP) funds for a long-dormant HUD foreclosure prevention program that provides emergency mortgage assistance relief to qualified homeowners, either directly or through intermediaries such as state housing agencies. 
 
Frank’s amendment also provides an additional $1 billion for the Neighborhood Stabilization Program (NSP) for the redevelopment of foreclosed and abandoned properties as affordable housing.  Program rules from NSP 2, as outlined in the American Recovery and Reinvestment Act of 2009 (ARRA), apply to this additional $1 billion, with some changes. 
 
The $1 billion will be allocated by formula in accordance with the Housing and Economic Recovery Act of 2008 (HERA), which established NSP, and the formula must be established within 30 days of enactment.  For this round of NSP, the HUD Secretary may not establish a minimum grant size for grants to states, but a minimum grant amount, not to exceed $1 million, may be established for grants to units of general local governments.  The definition of state is expanded to include the District of Columbia, Puerto Rico, the Virgin Islands, and insular areas. 
 
Each grantee must establish procedures to create preferences for the development of affordable rental housing.  Funds must be expended by September 30, 2013.
 
The underlying bill passed by a vote of 223-202, with no Republican support, and now moves on to the Senate where negotiations on the companion bill are underway.  Senate Banking Committee Chairman Chris Dodd (D-CT) is working with Committee Republicans to try to strike a bipartisan agreement on the bill, but it is unclear when the Committee will resume markups.