The U.S. House of Representatives passed the most sweeping financial regulation bill since the Great Depression on Friday afternoon. The legislation is extremely ambitious. It seeks to create a new Consumer Financial Protection Agency (CFPA) to regulate consumer credit products, to create a systemic risk council, to provide the Federal Reserve the authority to function as the systemic risk regulator, to create a non-bank resolution authority, to provide better oversight of the derivatives market, and to reshape the financial market as we know it today. It's an important first step in such legislation being written into law. But it's only a first step, and there's a lot of work left for Congress.

The vote had the same margin as the earlier failed CFPA amendment -- it passed with 223 ayes, by just five votes. The House's bill was based on recommendations from the Obama administration and Treasury, so you can expect that the President will come out in strong support of the legislation.

I wish I could provide a link to full text of the bill, but given all of the amendments that have been adopted, that's just impossible at this time. But here's its skeleton, if you're interested. I considered the initial bill at length in October, and also analyzed a few of the amendments. Frankly, I doubt many of the Reps that voted for it knows exactly what the final legislation contains.

Now comes the really hard part -- the Senate. I would expect this bill to be watered down significantly for it to get through the more moderate chamber. Remember, the bill only passed by a measly five votes in the House. Meanwhile, the Senate hasn't even had significant progress marking-up its version of financial regulation. Most reports I've read expect some final version of financial regulation to be signed into law sometime next spring.