The House Financial Services Committee today approved the Financial Stability Improvement Act of 2009, meant to curb systemic risk and the problem of firms becoming too big to fail. Even though this is just a first step, it's pretty significant. The bill, sponsored by committee chairman Barney Frank (D-MA), will likely serve as the blueprint for whatever final legislation the President signs.

The proposal was approved by a vote of 31 to 27. The vote was completely partisan, with all ayes coming from Democrats and all nays coming from Republicans.

I've written enough about this proposal up to this point and subsequent amendments that I probably don't need to say a whole lot more. But as I noted this morning, its timeline will likely be much quicker than the Senate's version, which is struggling. The more I think about it, the more it wouldn't surprise me if Sen. Dodd (D-CT) abandons his legislation and just works with the House version to try to get something passed sooner than later. Many of the differences between the two proposals amount to more aggressive measures on Dodd's side, which probably won't fare too well in the Senate anyway.

According to Frank, this bill could pass in the full House by year's end. The chamber will begin considering the legislation next week. Luckily, the House is done with health care, so there shouldn't be too much else standing in its way. But as I mentioned earlier, the battle in the Senate is sure to be much, much tougher.

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