What is '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 Impact Finance

The House Financial Services Committee oversees banks and banking legislation. It also proposes the 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.

RELATED TERMS
  1. Audit Committee

    An audit committee is one of the main operating committees of ...
  2. Separation Of Powers

    Separation of powers occurs in an organization, when responsibilities, ...
  3. Checks And Balances

    Checks and balances within an organization are the various procedures ...
  4. Gridlock

    Gridlock occurs when the government is unable to pass laws because ...
  5. Federal Budget

    The federal budget is an itemized plan for the annual public ...
  6. Appropriation

    Appropriation is the act of setting aside money for a specific ...
Related Articles
  1. Financial Advisor

    Investment Committees: Duties and Responsibilities

    An investment committee can help plan sponsors avoid fiduciary liabilities. Included is information regarding the duties and responsibilities of investment committee members.
  2. Investing

    Evaluating the Board of Directors

    Learn how evaluating the board of directors corporate structure can tell you a lot about a company's potential.
  3. Managing Wealth

    3 reasons to separate CEO and chairman positions

    Separating the high-profile positions of chairman and CEO can help to strengthen the overall integrity of a company.
  4. Retirement

    How Congress Retirement Pay Compares to the Overall Average

    There are more retirement plan options for a member of the United States Congress than for the average citizen.
  5. Insights

    Can Trump Kill This Big Wall Street Tax Break?

    As the next U.S. president, Trump may try to end carried interest, which gives tax-advantaged pay to many kinds of fund managers. The odds are daunting
  6. Investing

    Why Committees Shouldn't Make Investment Decisions

    Investing by committee may seem like the democratic way, but it can lead to bad investing decisions.
  7. Insights

    Why Is The Federal Reserve Independent?

    An overview of the independent status of the Federal Reserve and arguments for and against it.
  8. Taxes

    What Disney Can Teach Us About Tax Fairness

    Disney's tax questions are anything but Goofy: It pays much higher taxes than many multinationals, illuminating the unlevel playing field Congress created.
  9. Insights

    Money And Politics

    Learn about the progression of events and legislation that shaped and influenced today's political environment.
  10. Insights

    Trump Gets Down to Business

    Which of Trump economic proposal might actually come to fruition? A scorecard.
RELATED FAQS
  1. How are investment banks regulated in the United States?

    Read about the extensive regulations placed on investment banks in the United States, starting with the Glass-Steagall Act ... Read Answer >>
  2. What is impact of Sarbanes-Oxley Act?

    Here is a detailed rundown of the provisions of the Sarbanes-Oxley Act, including strict disclosures, criminal liability ... Read Answer >>
  3. What impact does government regulation have on the financial services sector?

    Learn about how the financial services industry is affected by government regulation, and the different types of regulations ... Read Answer >>
Trading Center