Next Step for Regulatory Reform: House and Senate Reconciliation

May 21, 2010 — With the Senate approval of S. 3217 on May 20, the House and Senate leadership will now reconcile the Senate bill with H.R. 4173, the regulatory reform package approved by the House in December 2009.

One main element of reconciliation will be how to address consumer protection. The House bill includes a separate stand-alone agency, the Consumer Financial Protection Agency (CFPA). In the Senate legislation, a bureau of consumer protection would be established at the Federal Reserve. Both bills address systemic risk, derivates, "too big to fail," and other elements of financial reform.

NASCUS will encourage the Congressional leadership to ensure state regulators are part of the mechanism for systemic risk mitigation. Both pieces of legislation include a group for systemic risk mitigation, but the Senate version lacks a role for state regulators. NASCUS wrote to Senate leaders about the importance of changing this part of the legislation, and including a state credit union regulator on the group.

Further, NASCUS will closely watch preemption issues as the House/Senate conference on this bill continues. With last minute changes to the Carper amendment to S. 3217, the standard for preemption of state consumer protection laws by national banks was better for the states than expected, but the House version is considered less preemptive.

"As the two bills are reconciled by the House and Senate, NASCUS is hopeful we can ensure state regulators are part of mechanisms for systemic risk mitigation and that preemption of state consumer protection laws is not taken any further," said NASCUS President and CEO Mary Martha Fortney. "NASCUS will continue to promote the importance of state regulatory authority, state consumer protection laws and state chartering options as the House and Senate reach consensus on the two bills."