Consumer Law

CFPA Debate in the Senate Hits the Final Stretch

By Deepak Gupta

by Deepak Gupta

A little over an hour ago, the Senate agreed to end debate over the financial reform bill within the next 30 hours. The vote to invoke cloture was 60 to 40, with GOP New Englanders Olympia Snowe, Scott Brown, and Susan Collins joining nearly all Democrats.  (Maria Cantwell and Russ Feingold voted no, based on their objection to the lack of strong language on derivatives.)

The Senate is now debating two important amendments:

• Sam Brownback's amendment to create an exemption from the Consumer Financial Protection Bureau's jurisdiction for car dealers that originate or broker loans to consumers.  The Defense Department recently came out in support of jurisdiction over auto lenders, given the significant impact that abusive auto-lending practices have on members of the military. Auto dealers made a major push for the legislation today.

• Jeff Merkley and Carl Levin's amendment to restrict proprietary trading at banks and other major financial institutions--designed to end Goldman-Sachs-style conflicts of interest. (The amendment is similar to the so-called "Volcker Rule" proposed by former Fed chair Paul Volcker.)

For reasons of parliamentary procedure and political compromise, the amendments' fates may be linked.  Senators who want to rein in risky trading by big investment firms may be forced to swallow the bitter pill of the Brownback exemption--or vice versa.  The White House strongly supports the former and strongly opposes the latter.

Another disturbing development: Scott Brown's cloture vote was likely gained at the cost of some important consumer protections.  Before he voted yes, he was insisting on getting exemptions from the Volcker rule for big insurers and mutual fund companies in Massachusetts. ?The key thing that we?ve been working on for three weeks ? that directly affects MassMutual, Liberty Mutual, Fidelity ? it?s not in there,?? Brown said before the vote, adding that he would support the bill if those changes were made.

Full post as published by CL&P Blog on May 20, 2010 (boomark / email).