Changes to financial rules OK'd

WASHINGTON — — The House voted 223 to 202 Friday to approve the most sweeping overhaul of financial regulations since the Great Depression, a sprawling measure that would create a new agency to protect consumers and give the government broad new powers to dismantle large companies that pose risks to the economy.

The nearly 1,300-page bill also would make other major changes to federal oversight of the financial system.

Those include outlawing many predatory and abusive loan practices, imposing new restrictions on the largely unregulated market of complex financial derivatives, giving shareholders the right to nonbinding "say-on-pay" votes and reining in the authority of the Federal Reserve.

President Barack Obama has made the financial overhaul one of his top priorities.

Obama has pushed Congress to approve the regulatory overhaul before the end of the year. But Senate action lags far behind the House's vote, and its bill differs in some key areas, making it unlikely legislation would reach Obama until next year.

In addition, the House bill faced strong opposition from Republicans, many financial institutions and business groups, particularly the U.S. Chamber of Commerce.

Democrats said Republicans were more concerned with protecting deep-pocketed Wall Street companies than enacting new regulations to prevent average Americans from suffering through another financial crisis.

"The Republican position is: Business knows best. Do not have any rules, do not prevent ... any of the irresponsible, reckless, over-leveraging that happened and led to the crisis," said House Financial Services Chairman Barney Frank, D-Mass., who led the push for the bill.

But Republicans said the legislation amounted to a federal takeover of the financial services industry.

"It's about the difference between a free-enterprise economy and a managed and controlled economy," Rep. Steve King, R-Iowa, said of his party's approach. "It's about the difference between liberty and ... a socialized economy."

One of the most controversial parts of the legislation is the creation of a Consumer Financial Protection Agency. It would have the power to write rules for a variety of financial activities involving loans or credit, to monitor companies for compliance and to ban products and practices it deemed were "unfair, deceptive or abusive."

The agency would take from the Federal Reserve the ability to write consumer protection rules and strip from banking regulators the authority to monitor financial enterprises for compliance with those rules.