The Consumer Financial Protection Agency Lives, Cramdowns Fail

Today, the House of Representatives is considering the big financial regulation bill. Before they vote on the final bill, they're considering a slew of last minute amendments. One of those amendments, offered by Rep. Walt Minnick (D-ID) would have seriously weakened the creation of a Consumer Financial Protection Agency (CFPA). Another amendment offered by Rep. Jim Marshall (D-GA) would allow bankruptcy judges to reduce the balances of the underwater mortgages of homeowners facing foreclosure, also known as "cram downs." Both failed, but each says a lot about the ongoing financial regulation effort.

Minnick's amendment would have replaced the CFPA with a council of existing regulators to protect consumers. The amendment was narrowly voted down. I think foreshadows disaster for the CFPA ultimately.

How close was the vote? Extremely close. The amendment failed by just 5 votes. All Republicans voted for it, and a hefty number of Democrats also did too. Ultimately, 223 voted against it, just reaching the 218 threshold needed to kill the amendment.

But remember, this is the House of Representatives, which is much more liberal than the Senate. Will moderate Democrats allow a CFPA to make it into whatever final version of financial regulation eventually passes? Given the closeness of the House vote, I suspect not. So despite its failure today, I have a hunch you haven't heard the last of this proposal by Rep. Minnick. When the compromising comes around to finally get a bill passed in the Senate, its moderate Democrats may bring it back to life.

As for the cram downs amendment, its failure is a little surprising. The House passed a similar bill earlier this year, but the bill failed in the Senate. I'm a little unsure why the amendment failed this time, other than the fact that Democrats just assumed the Senate would kill it during the reconciliation process anyway.

A few more amendments may be considered, with the final vote supposedly coming shortly. I'll report on the final result, so stay tuned. I expect it to pass, but by a relatively tight margin, without any Republican support.

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Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.

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