DEFINITION of 'Congress'
Congress is the legislative branch of the U.S. government. It is responsible for making laws and helps to balance out the power of the executive and judicial branches of government. Congress has enumerated powers established by the U.S. Constitution, including laying and collecting taxes, borrowing money, regulating commerce and declaring war.
BREAKING DOWN 'Congress'
Congress consists of the Senate and the House of Representatives. Each state elects a number of representatives in proportion to that state's population. The representatives serve two-year terms. Each state also elects two senators who serve six-year terms. The political power in Congress impacts the financial world directly. For this reason, almost every large industry has many lobbyists in Washington pushing their agendas.
Both the House and Senate utilize committees to get a majority of work done in Congress. Committees consist of members of both parties, with a majority of members coming from the majority party. The committee chairperson sets the number of committee members. This panel decides what legislation goes to the full House or Senate for consideration.
Committees decide how to word legislation thanks to written recommendations from executive cabinet departments and testimony from expert witnesses. The committee then decides on the language of a bill, a process called perfection, before sending the bill to the full chamber. The Senate has 20 committees and 68 subcommittees. Specific panels oversee financial issues important to Americans.
Committees That Affect Finance
The House Financial Services Committee oversees banks and banking legislation. It also proposes monetary policy for the federal government. In addition this committee decides on financial aid packages to industries other than transportation while providing policies on economic stabilization. The House Financial Services Committee deals with issues regarding securities, credit and insurance.
The Senate Finance Committee considers legislation for the federal debt, tariffs, Social Security, Medicaid and foreign trade agreements, among other duties. This committee oversees the trade of durable goods and assistance for needy families.
Another powerful panel in Congress is the House Appropriations Committee. This body decides how to fund the federal government every fiscal year. This committee sets the budget for the federal government, funds various programs and decides how to spend tax revenue.
How Congress Changes the Financial Industry
Congress passes laws that affect the financial industry in big and small ways. One law, the Sarbanes-Oxley Act, passed Congress in 2002 after scandals at Enron and WorldCom. The law said that, ultimately, the CEO, other executives and management staff of a company are responsible for accounting practices and financial statements. The law also helps prevent abuse and fraud so investors can make more confident selections when purchasing stocks or shares of a company.