October 14, 2009

Small neighborhood banks and the U.S. Chamber of Commerce are overshadowing the nation's biggest banks in influencing lawmakers as Congress begins the initial phase of its long-awaited overhaul of how the government regulates financial companies.The House Financial Services Committee on Wednesday is taking up key elements of President Barack Obama's proposal for correcting the practices of banks, investment houses and other financial institutions that caused last year's economic collapse.

Up first is a measure that for the first time would regulate privately sold derivatives like credit default swaps, the complex contracts that brought down Wall Street banking house Lehman Brothers Holdings Inc. and nearly toppled insurance giant American International Group Inc.The committee also wants to establish a Consumer Financial Protection Agency to police mortgages, credit cards and other consumer products offered by banks and other financial institutions.