The House passed the financial regulatory reform bill that emerged from a House-Senate conference committee by a 237-192 margin.

The sweeping 2,323-page bill passed after House and Senate leaders agreed to drop a controversial tax provision that would have imposed $19 billion in fees on the largest banks and hedge funds. The provision had been inserted in the final stretch of a 20-hour marathon bargaining session before the conference committee released a compromise bill last Friday morning (see Conference Committee Finalizes Financial Reform). To make up for the fees, lawmakers agreed to end the Troubled Asset Relief Program three months ahead of schedule and charge banks more for deposit insurance.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, named after Senate Banking Committee Chairman Christopher Dodd, D-Conn., and House Financial Services Committee Chairman Barney Frank, D-Mass., contains far-reaching reforms of the financial system, including the creation of a Consumer Financial Protection Bureau within the Federal Reserve and resolution authority for dismantling large failing banks.

The bill also provides for regulation of auditors of broker-dealers by the Public Company Accounting Oversight Board, and exempts smaller public companies with a market cap of under $75 million from Sarbanes-Oxley Section 404(b) audits of management's assessment of internal controls. CPAs and tax preparers are exempted from regulation by the Bureau of Consumer Financial Protection, and CPAs may be called upon to assist in audits of the bureau by the Comptroller General.

However, the legislation attracted only three Republican votes: Joseph Cao of Louisiana, Michael Castle of Delaware, and Walter Jones of North Carolina. Nineteen Democrats and 173 Republicans opposed the bill. When the House passed the original bill in December by a 223-202 margin, no Republicans voted for it.

The bill originated with a series of proposals from the Obama administration. Treasury Secretary Tim Geithner hailed the passage of the legislation on Wednesday evening.

“We congratulate the House of Representatives on passing historic financial reform and commend Chairman Frank and Chairman Peterson for their leadership throughout this process,” he said. “This is a strong bill. It will provide essential protections for consumers and investors and help make sure the financial system meets the credit needs of Main Street America. With action by the Senate, we will be able to turn our attention to putting these protections in place.”

House Speaker Nancy Pelosi, D-Calif., also welcomed passage of the bill. “When the Senate soon acts on this historic legislation and the President signs it into law, the country will enter an era of transparency for our financial markets, tough oversight of Wall Street, and strong consumer protections on Main Street," she said.

House Republicans dismissed the bill as misguided. "This legislation is a clear attack on capital formation in America," said Republican whip Eric Cantor, R-Va. "It purports to prevent the next financial crisis, but it does so by vastly expanding the power of the same regulators who failed to prevent the last one."

Passage of the bill in the Senate is still uncertain. President Obama had hoped to get it signed before the July 4 holiday break, but passage has been complicated by the death Monday of 92-year-old Sen. Robert Byrd, D-W.Va., who will lie in state in the Capitol on Thursday. Democrats still hope to attract the votes of Republicans Scott Brown of Massachusetts and Olympia Snowe and Susan Collins of Maine, but passage of the bill is not likely to happen until at least the middle of July.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access