Anyone thinking that health care reform will completely overshadow financial regulatory reform this fall may be underestimating just how determined the Obama Administration and Congress are to push forward on all reform fronts. In fact, just yesterday, it was reported that the House Financial Services Committee staff have tentatively scheduled a committee vote later this month on the Consumer Financial Protection Agency. This announcement signals that the House committee is eager and ready to pick up right where it left off prior to the August recess and also offers hope that action will be taken on the fiduciary front.
As a quick recap, after the Obama plan was released in June, House Financial Services Committee Chairman Barney Frank, announced that financial regulatory reform will be packaged into one comprehensive bill for the Senate's final consideration this fall, but that the House will do individual mark-ups of each piece of the package. Prior to heading into recess, the House passed the Corporate and Financial Institution Compensation Fairness Act of 2009 and referred it to the Sentate Banking Committee. Other portions of legislation currently awaiting the House committee's consideration include the Consumer Financial Protection Agency Act of 2009, Investor Protection Act of 2009, and Private Fund Investment Advisers Registration Act of 2009.
The House committee was originally scheduled to consider the Consumer Protection Financial Agency in July, but was delayed due to industry opposition. As noted earlier, the announcement that the committee will consider the agency this month represents a bold affirmation that reform will move forward. Though it is not certain whether the House and Senate can keep up a pace that will produce a reform package before the end of the year, it is clear that they are determined to get as close to a final comprehensive bill as possible in the coming months.
This also means that the Investor Protection Act of 2009, which would give the SEC authority to adopt standards of conduct for investment advisors and broker-dealers, could be marked up at the committee level and considered on the House floor by late October. The bill specifically seeks to promote the fiduciary standard for all financial intermediaries subject to SEC jurisdiction and would also give the SEC authority to ban certain sales practices, conflicts of interest, and compensation structures and to require simple and clear disclosures to investors. There is still much to be debated on Capitol Hill with regard to financial regulatory reform issues, but no one should make the mistake of thinking that reform will not be advanced as quickly as possible, including the enactment of legislation that could dramatically affect the fiduciary landscape.
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