The legislative process is not quite as simple as that old Schoolhouse Rocks! song "I'm Just a Bill" (but it's a fun primer if you want to watch it again). Here is a more thorough, albeit still abreviated, examination of the legislative procedure.
A bill contains one or more legislative proposals and can be written by any member of Congress — often with the help of groups like FPA and the Financial Planning Coalition. Once it is officially introduced, it receives a number. If it originates in the House of Representatives, it will have the letters "H.R." before the number, or an "S." if it starts in the Senate. You can look up legislation at Congress.gov (click the radio button for bill number if you know it). Each Congress lasts two years. We are now in the 111th Congress which will end when Congress formally "adjourns sine die" probably sometime in December 2010. Representatives are elected to 2-year terms. Senators serve for 6 years, with only about one-third of the Senate seat up for election in any given election.
The legislator that introduced the bill is called the "sponsor." Other legislators who support the legislation can become official "cosponsors." The more cosponsors a bill, the broader its support, and the greater chance of becoming law.
The House and Senate operate under different sets of rules and customs. The majority party in the House can usually pass anything it wants by a simple majority vote. House Committee Chairs wield tremendous power and can usually dictate the terms of legislation coming out of their committees. The rules are more flexible in the Senate. Sixty votes are required for almost every major step of the legislative process, giving individual senators expansive leeway to influence the process.
Bills are first considered by the committee of jurisdiction, though noncontroversial bills sometimes proceed directly to a floor vote. Legislation relating to the oversight of financial planners is considered by the House Financial Services Committee, chaired by Rep. Barney Frank (D-Mass.), and the Senate Banking Committee, chaired by Sen. Christopher Dodd (D-Conn).
Committees frequently hold hearings to gather information, hear various viewpoints, and air out differences of opinion. Bills are considered, amended, and finally voted on by the committee during a process referred to as a "mark up." The legislation under consideration is customarily referred to as "the Chairman's Mark", which usually has modest tweaks to the original legislative language to address concerns or priorities of the committee members. If the legislation is approved by a majority of the committee ("reported favorably"), it then may proceed to the House or Senate floor. If it is not approved, the bill "dies in committee" (more below).
In the House, the majority party tightly controls the floor process, including what amendments — if any — may be considered and how much time will be allocated for the debate. Things are different on the Senate side where almost every major step of the process is subject to a 60-vote threshold to pass — the "filibuster". Technically a filibuster requires a senator to physically take to the floor and speak, but usually that is not the case today. Because getting 60 people to agree to anything is an arduous task, opponents usually work out an agreement beforehand and move the process by unanimous consent ("U.C."). These U.C. agreements involve numerous closed-door negotiations and backroom on unrelated legislation, making the Senate process considerable more opaque.
After being approved by committee and on the floor, the bill moves to the other side of the capital to be considered through the same process. So a Senate bill approved on the Senate floor goes to the House to be considered by the House committee and House floor, and vice versa. If there are no changes when it is considered by the other body, the process is done and the bill is sent to the President for his signature.
If changes are made, the bill can proceed down two paths: "ping-pong" or "conference committee".
"Ping-pong" is the unofficial name of the process where the House and Senate send legislation back and forth, narrowing their differences each time, until a final agreement can be reached. It is the more common procedure for smaller, less controversial bills. The House or Senate can also decide to "go to conference." In this case, House and Senate leaders choose representatives to negotiate a deal in a conference committee. This process is typical for larger, signature pieces of legislation, and is usually done behind closed doors.
Assuming identical legislation is agreed to and passed by both House and Senate, the legislation is sent to the President who has 10 days (not including Sundays) to approve it. Or he may veto it, which requires an affirmative vote of two thirds of both the House and the Senate to override — a tall order.
If the bill fails to clear any of these hurdles, it is "dead." While resurrection is possible, it must be done on a different bill. Typically there is little appetite for a second run. If Congress adjourns sine die before the proposal can be passed, the process must begin again in the next Congress.
Lots of byzantine rules governing the entire legislative process have evolved separately for the House and Senate. However, these rules can — and often are — bent or broken. The important things to remember are: majority rules in the House, and 60 votes are required to do anything in the Senate. One final observation: the tensions between the House and Senate during the negotiating process transcend party. To paraphrase Rep. Sam Rayburn (D-TX) who was the Speaker of the House for 17 years during the mid 1950s: the Republicans are the opposition, the enemy is the Senate.