The US House of Representatives has passed a bill which is expected to help usher in the most sweeping changes to the way the country regulates its financial services sector since the economic programmes of the 1930s, which lifted the US out of the depression.

Defying stiff resistance from the US Republican party as well as banking sector lobbyists, the bill passed by a vote of 223 to 202. It will strengthen consumer protection, as well as reinforce government regulation in the financial services industry. Before it is made into law, it still needs to be approved by the US Senate, but some US senators expect it to be passed within the first six months of 2010.

Under the House version of the bill, which is slightly different than the one being debate in the US Senate, the US Federal Reserve would be stripped of its powers to write consumer protection laws. This responsibility would be taken over by a newly-created independent Consumer Financial Protection Agency which will go after abuses such as unscrupulous mortgage deals and excessive credit card rates.

Among its many provisions, it will also create a new body called the Financial Services Oversight Council to identify and regulate financial firms that are so large and interconnected that they are considered too big to fail. It will also give the US government the right to step in and dismantle failing non-bank financial firms that threaten the economy, powers that have been put in place to avoid another collapse such as that faced by Lehman Brothers or the American Insurance Group.

Meanwhile, the Government Accountability Office, an investigative arm of the US Congress, will be bestowed the authority to audit the US Federal Reserve. Banks will also have to pay the Federal Deposit Insurance Corporation US$150 billion to set up a fund in case of future failures in the US financial sector.

In his weekly radio and internet address, US President Barrack Obama said that although the roots of the most recent financial slump can be traced to the use of “easy credit” that encouraged people to borrow regardless of their financial position, he added that “much of it was due to the irresponsibility of large financial institutions on Wall Street that gambled on risky loans and complex financial products, seeking short-term profits and big bonuses with little regard for long-term consequences.”

“This legislation brings us another important step closer to necessary, comprehensive financial reform,” he added.

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A Taiwanese producer of LCD displays has been fined US$220 million after pleading guilty to participating in a price-fixing racket. This brings to six the number of companies which has been implicated in the global LCD price-fixing ring that authorities in the US, Europe, and in Japan have been investigating.

Tainan-based Chi Mei Optoelectronics has pleaded guilty to one count of participating in a conspiracy to fix the prices of LCD display panels, which are used in consumer electronics products such as computer monitors, notebook PCs, mobiles phones, and televisions, between September 2001 and December 2006.

The five other companies which have previously pleaded guilty are LG Display, Sharp, Chunghwa Picture Tubes, Seiko Epson, and Hitachi. They have been fined an aggregate US$860 million, and nine executive have been charged in the-going investigation.

According to the US Department of Justice, the company manipulated the market by holding meetings and conversations with competitors, at which point they would agree to sell goods at certain pre-determined levels. To enforce and monitor the agreement, Chi Mei exchanged information on its sales of LCD panels with competitors, the agency said.

Its actions directly affected some of the largest computer and television manufacturers in the world, including Apple, Dell, and HP. By the end of the period in which Chi Mei engaged in the price-fixing racket, the global market for LCD panels was valued at US$70 billion.

As part of the plea agreement, Chi Mei has agreed to cooperate with the government’s on-going anti-trust investigation.

Price-fixing is in violation of the US Sherman Act, and each violation carries a maximum penalty of US$100 million. This could be increased to twice the gain derived from the crime, or double the loss suffered by its victims.

Commenting on its decision to plead guilty, Eddie Chen, Chi Mei’s head of finance, told Bloomberg: “We thought it was the best way to get things over.”

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