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The House of Representatives is taking action to attempt to avoid another financial disaster in the big banking industry like the one that led to the economic crash last year. While many Americans are skeptical of the way Congress has handled the problem so far, Congress is working to create an agency, The Consumer Financial Protection Agency, authorized in the bill, The Wall Street Reform and Consumer Protection Act. The agency is touted as a solution to prevent a recurrence of the outrageously expensive debacle amongst the country’s biggest banking institutions.

The House has passed the bill, which will create a new agency, The Consumer Financial Protection Agency, and give it responsibility for making sure consumers know and can understand the rules and regulations regarding the banking industry. The agency will also be used for providing education and other resources for the protection of the American public regarding financial issues in order to prevent another economic disaster such as the one that led to the current recession.

The new Consumer Financial Protection Agency won’t have total control over the financial industry, however. The proposal doesn’t give the agency any oversight over financing in the auto industry, nor will it have any influence over credit- related insurance purchases. Small banks and credit unions will continue to be under the jurisdiction of the banking industry, rather than the newly formed agency. Proponents of the bill are hoping the watchdog agency can help the American public understand enough about the workings of the financial world so people can make informed choices about their own decisions and avoid winding up in over their heads, such as in the mortgage debacles that caused thousands of people to purchase homes they couldn’t afford.

Although the House of Representatives has approved forming the Consumer Financial Protection Agency, things won’t move forward until the Senate Banking Committee also approves the agency. The issue won’t be heard by the Senate Banking Committee until sometime in February or March of 2010. As with most issues in Congress, there is some opposition to the proposal, so it is far from a sure thing at this point in time.

The bill also attempts to provide consumer protection by requiring brokers to give advice that is in their clients’ best interests, rather than their own. Those opposing the bill are stating concern that the agency will do little more than increase the ability of the government to intrude on private business practices, while those favoring the bill see it as a step toward preventing a repeat of the banking scandals of 2008 and 2009, which included outrageously large bonuses for the upper echelon of failing banking institutions.



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