[JURIST] The US Senate Committee on Banking, Housing, and Urban Affairs [official website] on Monday voted 13-10 in favor of the Restoring American Financial Stability Act of 2010 [text, PDF; summary, PDF], aimed at increasing oversight of the American financial system in the wake of the recent economic crisis. The vote on the legislative initiative, introduced [JURIST report] by Senate Democrats earlier this month, was split along party lines, with all Republican members voting against the proposed legislation but declining to negotiate [NYT report] in committee despite the 401 amendments that had been filed. The bill includes proposals for creating consumer protection entities with oversight over consumer lending, complex companies, and the insurance industries; increased regulation for financial instruments, banking, and corporate governance; and new rules to strengthen accountability in applying financial regulation. Two prominent features of the bill are the Volcker Rule [WH materials] prohibiting banks from engaging in financial activities for profit where the funds do not benefit the banks' customers, and an initiative that gives the government power to break up financial institutions deemed "too big to fail." Ranking Republican senator Richard Shelby [official website] decried [statement] such an early vote, saying that "[f]orcing the Banking Committee to vote on this proposal in a single week is unrealistic and undercuts the potential for bipartisan agreement given the length and complexity of the bill." Senate voting on the bill is expected to be a protracted process until a version to which both Democrats and Republicans will agree is reached.

In December, the US House of Representatives approved a similar bill [JURIST report] to create a consumer financial protection agency. The House Financial Services Committee [official website] had approved the bill in October, after originally delaying [JURIST reports] it at the behest of financial industry leaders in July. The creation of the agency is a key step in achieving the Obama administration's stated goal of tightening financial industry regulations. In June, the administration proposed a broad series of regulatory reforms [press release; JURIST report] aimed at restoring confidence in the US financial system. In 2009, the first legislative proposal [text, PDF; JURIST report] to reform the financial system since the 2008 economic crisis was met with resistance and resulted in the committee's development of the current bill.