WASHINGTON (12/15/09)--The House late last week passed H.R. 4173, the Wall Street Reform and Consumer Protection Act, which the House in a release hailed as “a comprehensive set of measures that will modernize America’s financial regulations and hold Wall Street accountable.” The final vote on the legislation followed over 50 hours of debate in the House Financial Services Committee, and while the Senate is expected to begin its debate on regulatory reform soon, the schedule for that debate is unknown at this time. A main goal of the legislation is the creation of the proposed Consumer Financial Protection Agency, which would seek to protect consumers of financial products through the creation of a powerful independent agency with extensive rulemaking, oversight, and enforcement tools. The bill also creates an interagency Financial Stability Council to identify and regulate firms that pose a significant risk to the overall financial system and would establish an “orderly process” for dissolving so-called too big to fail financial entities. Investors would be further protected by a strengthened, reformed Securities and Exchange Commission, and investors would be further supported by new rules that would grant them a “an advisory vote on pay practices including executive compensation and golden parachutes.” Potentially harmful compensation practices would also be banned, and firms would be forced to disclose any incentive-based compensation arrangements. The legislation also takes “strong steps to reduce conflicts of interest” regarding credit rating agencies and would also require hedge fund, private equity, and private pool of capital advisors, who currently operate in an essentially regulation-free manner due to a regulatory loophole, to register with the Securities and Exchange Commission. These funds and their advisors would also fall under new systemic risk regulations. Over-the-counter derivatives would also be regulated for the first time ever. The bill also increases oversight of the insurance industry via a Federal Insurance Office and would increase oversight of the mortgage industry as well. Under this portion of the bill, lenders would be required to ensure that the terms of a mortgage benefit the borrower. The lenders must also be certain that their borrowers can repay the mortgage loan that they have been sold.