12-06-2016  11:54 am      •     

WASHINGTON (AP) -- Creating a U.S. agency to regulate home loans, credit cards, savings accounts and dozens of other financial services won the approval of a key House committee on Thursday in spite of loud complaints from banks and businesses.
President Barack Obama, who had proposed the new agency to Congress, applauded the 39-29 vote, which fell mostly along party lines. This step ``sends an important signal to the American people that we will not stand by and allow big financial firms and their lobbyists to mobilize against change,'' Obama said in a statement.
The committee also approved legislation that would impose new rules for credit cards by Dec. 1, moving up the date from mid-February. Democrats said changing the date was necessary because lenders were using the grace period to hike interest rates.
The proposed Consumer Financial Protection Agency is a cornerstone to Obama's broader plan to clamp down on Wall Street and prevent much of the reckless lending that contributed to last year's near-collapse of the market.
But the agency also has been the administration's toughest sell to lawmakers worried that the added regulation would strain neighborhood banks and small businesses.
As business lobbyists pressed lawmakers to scale back the legislation and won several concessions, Treasury Secretary Timothy Geithner and other senior administration officials personally appealed to lawmakers not to weaken the bill.
In the end, the bill included numerous exemptions for businesses like auto dealers. All but the biggest banks were spared from routine agency inspections and no businesses were required to offer standard, government-approved financial services, as Obama had wanted.
Under the bill, banks would be allowed to seek exemptions from state laws on consumer protection. Obama had wanted to give states blanket authority to regulate large national banks without exception.
Democrats and consumer advocates said following the vote that they were content to see the legislation survive much of the backdoor political wrangling after such an aggressive backlash by businesses. The U.S. Chamber of Commerce led industry opposition with a $2 million advertising campaign this summer.
``Everyone told me that the banks always win. Quit now because they always win,'' said Elizabeth Warren, who heads an independent panel that monitors the government's bank bailout program and initially proposed the concept of a consumer protection agency. ``They didn't win today.''
The American Bankers Association said it would continue to try to make its case against the agency as the legislation moves to the House floor in coming weeks and, eventually, to the Senate.
``We still have major concerns with some principal areas'' including ``the very broad, ill-defined authority that is granted to this new agency that could be used to justify essentially any regulatory action,'' said Floyd Stoner, ABA vice president for congressional relations.
Obama chastised the financial industry in his statement. ``They are doing what they always do _ descending on Congress, using every bit of influence they have to maintain the status quo that has maximized their profits at the expense of American consumers, despite the fact that recently those same American consumers bailed them out as a consequence of the bad decisions that they made,'' he said.
Administration officials said they expect a tougher fight in the Senate, where procedural rules will give Republicans more of a chance to influence the bill.
Senate Banking Committee Chairman Chris Dodd was expected to introduce his own version of the legislation. In a statement, the Connecticut Democrat said the House bill is a good one that ``appreciates that the most important piece of financial reform is ensuring that Americans are treated fairly and honestly.''

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