The House of Representatives, trying to stop the types of things banks were doing that got us into all this trouble, passed new legislation on Friday that put new regulations on the banking industry.

By a 223-202 vote, it’s forcing banks to pay into a fund to help offset potential problems that could happen again, with some banks having to pop in as much as $150 billion; ouch! It also calls for the regulation of some derivatives and creates a new Consumer Financial Protection Agency to regulate products such as credit cards and mortgages.

First, a quick video on derivatives:

Of course the Republicans were united once more in opposing this bill, and they got some Democratic help as well. But it passed easier than the health care bill, which barely passed by 5 votes. There were some changes to get those votes, including no regulation of auto loans, removing credit unions from being considered, and moving $3 billion from the bailout program that started all this stuff to create a program that will give up to $50,000 in emergency loans to unemployed homeowners to help them fight foreclosure.

Probably one of the most controversial measures, at least to me, is the one where regulators will have the power to break up companies they determine are too big, such they could destabilize the financial system if they got into trouble. I believe they were thinking about Citigroup with this one, which was the main company being talked about last year as the one that could bring down world finances because they had their hands into everything.

In a sidebar vote, the House also voted down, by a count of 241-188, an amendment that would have allowed bankruptcy judges to rework mortgages so people could keep their homes instead of being foreclosed upon. I understand the motivation for wanting that, but I think it’s best that they didn’t give judges that kind of power.

Now we have to wait to see what the Senate will do, and since it’s not even on their radar right now, it could be awhile. Truthfully, I have mixed feelings on this one. I believe there should be big time regulations, so I’m happy with that part. But the bill, in effect, basically eliminates all bailouts from this point on, for anyone, and I’m not sure that will always be in the best interest of the United States, or the world.

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