Last Friday the House passed its version of financial regulation reform. What struck me most about the debate was how the final package differed from the original proposals put forth by the House Financial Services Committee. On December 3, I attended a briefing with Congressmen and Financial Services Committee members Brad Miller (D-NC) and Ed Perlmutter (D-CO), who spoke briefly on the status of the bills and their expectations for the full House debate.

Here’s what I see as the key differences between Committee expectations – as expressed by Congressmen Miller and Perlmutter – and the final package, as well as what the House experience bodes for the Senate process:

1. Unexpected Opposition from Moderate Democrats: When speaking about internal Democratic divisions, both Congressmen focused on opposition from the Congressional Black Caucus, many of whose members wanted to delay reform to protest the lack of a jobs provision. They did not speak about opposition from moderate Democrats, and I was surprised to hear that 27 Democrats voted against the final bill.

2. Controversy around the CFPA: As both Congressmen predicted, the CFPA was by far the most controversial proposal. But I was still surprised by the number of last-minute changes to the agency. The CFPA narrowly survived a vote (backed by 33 Democrats) that would have entirely replaced the agency with a less powerful regulatory council responsible only for writing new consumer protection rules. The House also restricted the agency’s purview, exempting entire industries – including accountants, attorneys, and retailers – from direct CFPA oversight. Congressmen Miller and Perlmutter clearly expected amendments to the CFPA once the bill reached the House floor, but they did not seem to anticipate the scale of these changes.

3. Passage of the Entire Package: Both Congressmen said that they were willing to consider and pass each bill separately, meaning that the less controversial legislation would not have been delayed if the House failed to reach a consensus on the CFPA. Considering that the House did not take this approach and instead passed the full package, I assume one of two things: either opposition to the CFPA was not as strong as the Congressmen anticipated, or (more likely) House Democrats realized that they would need to make extensive changes to the agency once the Senate passed its bill and so decided to accept many concessions upfront.

Overall, the House debate called attention to rifts among Democrats, and given the stronger position of Republicans and moderate Democrats in the Senate, I expect that the Senate’s version of financial regulation reform (especially any provisions around consumer protection) will be much weaker than the House’s package.