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Wall Street Reform Clears Congress, Will Become Law

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A sweeping overhaul of Wall Street firms and American financial institutions won final congressional approval Thursday afternoon when the Senate voted 60-39 to pass the reform bill.

Three Republicans voted with the Democrats to approve it and one Democrat, Sen. Russ Feingold of Wisconsin, voted against the bill. Because the House approved the same measure in June, the legislation will now go to President Barack Obama.

On Tuesday, Obama praised the legislation and promised to sign it next week. "What members of both parties realize is that we can't allow a financial crisis like this one that we just went through to happen again," the president said. "This reform will prevent that from happening."

Hours before Thursday's vote, Senate Majority Leader Harry Reid called the bill the most sweeping since the Great Depression and predicted it will put laws into place to prevent another financial meltdown like the one that nearly crippled the American economy in 2008.

"We're saying to those who gamed the system, the game's over," he said. "With this bill, we're saying no more bailouts, because no bank is too big to fail. We're going to hold Wall Street accountable because we know we're accountable to the American people."

Speaker Nancy Pelosi echoed Reid, saying of the impact on Wall Street, "The party is over."

The bill was authored by Democrats Sen. Chris Dodd and Rep Barney Frank. Once signed, the new law will create broad new federal oversight and regulations for financial institutions, including banks, hedge funds, insurance companies and even car dealers, all intended to crack down on the risks and highly leveraged transactions that defined the financial sector in the decade before the economic crisis.

Specifically, it will empower the federal government to seize and unwind failing financial firms; establish a 10-member Financial Stability Oversight Council to monitor systemic risk in the system and order the seizure of failing banks; and create an agency for financial consumer protection under the Federal Reserve, overseeing most loan products, including credit cards, mortgages and car loans. It will also establish requirements for derivatives to be traded publicly through exchanges and clearinghouses.

The final legislation represents the latest compromise between House and Senate leaders, who have wrangled for nearly two years over the best way to respond to the 2008 financial crisis. Democrats were forced back to the negotiating table two weeks ago when Robert Byrd's death cost the measure a crucial vote in the Senate and gave Republicans more leverage to demand changes to the earlier agreement.

Earlier this week, Republican Sens. Scott Brown of Massachusetts and Susan Collins and Olympia Snowe of Maine, who voted for the Senate version of the bill last month, said they would also support the conference report after extra fees on large banks were dropped from the bill.

Despite the three Republicans' support, most GOP members of the House and Senate strongly opposed it. Even before the Thursday vote, House Minority Leader John Boehner panned the bill. "I think it ought to be repealed," Boehner said. After the House passed the bill, Boehner compared it to "killing an ant with a nuclear weapon."

Rep. Jeb Hensarling (R-Tex.), the top Republican on the House Financial Services' subcommittee on financial institutions and consumer credit, told Politics Daily that the bill fails to address what he sees as the initial cause of the financial collapse, namely the quasi-government mortgage giants Fannie Mae and Freddie Mac.

"The bill doesn't go to the root cause of the problem," Hensarling said when the House passed the bill. "If you have the wrong diagnosis you're going to offer the wrong remedy."

But Reid maintained that the only evidence he needs to believe that the bill will rein in Wall Street's risky habits is the opposition to it he's seen from Republicans and Wall Street bankers.

"Wall Street doesn't like this bill," Reid said. "Of course not. Why would they want us to change a system that made them all rich? This isn't about dollars and cents only, it's about fairness."

Click play below to watch a report on the financial reform vote from Carissa Kranz of Medill News Service:

Filed Under: The Capitolist, Economy

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kev

By Toby Harnden in Washington
Published: 7:51AM BST 26 Sep 2008 Mr Bush gave warning this week that his administration's plan represented the best chance of the US avoiding a severe recession or even a depression.

In a television address on Wednesday he said that America's "entire economy is in danger" and that, without the bail-out, markets "could slip into a financial panic and a distressing scenario would unfold".

July 16 2010 at 1:40 PM Report abuse -1 rate up rate down Reply
kev

Republicans can try to blame the working class for getting loans they could not afford?????? And guess what i can tell the truth can you???? Yes its true this happened!!!! But the truth comes with both sides of the story!!!!! You know those highly educated people at the banks and wall street who did the background checks on those applying for the loans?????????? What happened there????? What you don't know???????? Its the same as the illegal's coming to this Country!!!!! If those educated big business type hand out the money!!! or the jobs to illegal's they will come!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

July 16 2010 at 1:31 PM Report abuse -2 rate up rate down Reply
kev

Republicans controlled the Whitehouse & the Senate & Congress from 2001 to the beginnng of 2007!!!!! 6 years!!!!! I did'nt see them looking to pass any bill to protect us from the banks and wall street!!!!! In fact the Republicans only fight any checks and balances against wall street and banks!!!! Republicans fought against Obama making sure ( BP ) put money aside for Clean up and such for the oil spill?????????? That in itsself is proof what checks and balances Republicans want for big business's!!!!!!!!!

July 16 2010 at 1:14 PM Report abuse -2 rate up rate down Reply
Rob & Kathy

Just another power grab by this administration. When has the government really "fixed" anything...

July 16 2010 at 1:10 PM Report abuse +2 rate up rate down Reply
extpd311

Chris Dodd and Barney Frank led us into the greatest recession in modern times. Their influence in Fannie Mae and Freddie Mac directly caused the mess we're in... So it makes sense to let them lead us down another road to another financial disaster!

July 15 2010 at 11:59 PM Report abuse +11 rate up rate down Reply
1 reply to extpd311's comment
nbk4real

Wow, I have to wonder how many times that right wing spin will be regurgitated??? Its just to bad you buy into that because nothing could be further from the truth. I work in the banking industry and I can tell you that fannie and freddie were a miniscule part of that. You want the real culprits, look no further than the Wall Street banksters that walked away with 400 million $ bonuses the day before the market broke. Stop buying into that right wing spin, its not the truth. Poor people getting houses they couldnt afford had less to do with the bailouts than the moon.

July 16 2010 at 3:25 PM Report abuse -1 rate up rate down Reply
Jeff

Another 2300 page bill written by the 2 most deceitful and corrupt politicians in congress. If you think that any senator actually read it before they voted on it... I have a bridge in Brooklyn I will sell you real cheap.

July 15 2010 at 11:50 PM Report abuse +10 rate up rate down Reply
xtrees130

Why did Warren Buffet show up at the White House yesterday, unannounced, and meet with President Barack Hussein Obama?

July 15 2010 at 11:23 PM Report abuse +10 rate up rate down Reply
trb2244

Putting Chris Dodd and Barney Frank in charge of anything financial is analagous to making Bill Clinton the judge on matters of sexual harrassmant. What's more, I remember the Sarbanes committee a few years back-- weren't they supposed to make all these shenannigans impossible? I guess I mis-remember, huh? So let's see, if you don't lend to unqualified borrowers, the Dems will come get you, but if you do, and the bubble bursts, and they won't or can't pay their mortgages, it's all the fault of those nasty Republicans? Now I understand.

July 15 2010 at 8:53 PM Report abuse +10 rate up rate down Reply
punnster

It seems that Obama has helped Wall Street more than our economy and jobless. Wall Streeters are making more money and economy and employment are stagnant.

July 15 2010 at 7:16 PM Report abuse +7 rate up rate down Reply
Lphoenix7

All the republicans who opposed thwe bill where probably the ones who are still getting nice perks and kickbacks from the banks and credit card companies. The republicans of the Bush era are the ones who started all of this mess to begin with(by giving the banks and credit card companies carte blanche all those years ago) it finally caught up to us, I also think the government should crack down on credit card companies who get tax breaks for charge off accounts and then sell them to bottom feeding junk debt buyers thus getting paid twice for something. When you get credit for something that should put final to it.

July 15 2010 at 6:25 PM Report abuse -11 rate up rate down Reply

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