The U.S. House of Representatives made a historic vote in favor of consumers by passing H.R. 4173, the “Wall Street Reform and Consumer Protection Act of 2009,” on December 11. This bill would create an agency with authority to set strong protections for financial products, such as mortgages, payday loans, and credit cards.

The Consumer Financial Protection Agency (CFPA) could address problems that plague our financial system today, such as deceptive-by-design loans, misleading advertising, and contracts with terms buried in fine print. The CFPA would not only make financial products safer and improve the economic lives of consumers, but also lay the groundwork for a healthier, more transparent financial system and help prevent future financial crises.

The CFPA is especially good news for lower-wealth individuals and people of color, whose communities have been hardest hit by deceptive financial products, predatory lending and high rates of foreclosure. Woodstock has long documented these practices, such as  the targeting of communities of color with subprime loans and high-cost, small-dollar loans. Previously unregulated fringe financial service providers would now fall under the purview of the CFPA, which would be able to crack down on discriminatory lending practices and abusive product terms.

The bill is not without flaws, however. Financial industry lobbyists defeated several amendments that would have strengthened the CFPA, such as giving it authority to enforce the Community Reinvestment Act. Despite strong opposition from Illinois consumers and small business leaders, Illinois Rep. Melissa Bean (D-8)  introduced an amendment that would have prevented state regulators from enforcing stronger state consumer protection laws, but under a  less restrictive compromise, the Office of the Comptroller of the Currency will decide whether to preempt state laws on a case-by-case basis. Consumer advocates must continue working with legislators to ensure that  states can act quickly to protect consumers.

In Illinois, we also faced another disappointment: Rep. Debbie Halvorson (D-11) voted against H.R. 4173—and against consumers’ best interests. While she had the opportunity to support comprehensive financial reform, Rep. Halvorson instead chose to side with financial lobbyists and oppose the creation of a new agency that would stop unfair and abusive practices.

Thanks to all of the Illinois nonprofits, community groups, government officials, and individual supporters who rallied on behalf of consumers and made countless calls to strengthen and support the CFPA. Our work now continues in the U.S. Senate, where a financial reform bill is likely to hit the floor early next year. Let’s repeat this victory in 2010!