The Senate has approved a bill with some of the most sweeping changes to the financial services industry since the Great Depression. Designed to take on problems that led to the brink of collapse nearly two years ago, it spans 1,400 pages and touches on a dozen sectors of the industry. But lawmakers said the key focus is restoring public confidence.
"We never, ever, ever again want to see you go through this because your government failed to establish the rules, the regulations, the safeguards against the behaviors that brought us to this point," said Banking Committee Chairman Chris Dodd (D-CT).
But some senators, including Republican John Kyl of Arizona, said it falls short of being able to correct those issues.
"I hoped the bill would be amended to actually end taxpayer-financed bailouts and the concept that companies can be too big to fail, but that didn't happen," Kyl said. "So we're left with a bill that enshrines into law failed policies of the past, imposes a massive new bureaucracy on small business that had nothing to do with creating the financial crisis, and threatens jobs in our economic growth."
Policing Lending, Derivatives, Dissolution
Contributors to the crisis, such as predatory mortgages, are dealt with in the legislation through a proposed consumer financial protection bureau to police personal lending.
The derivatives market where financial firms bundled, sliced and bet on mortgage products would be brought onto a formal trade system with clearing requirements to ensure that those involved could cover their bets.
And instead of bailing out financial firms considered too big to fail, the bill seeks to establish a process for companies to be dissolved by banking regulators.
But Republican lawmakers argued that loopholes in the legislation could allow dying firms to survive like zombies on the taxpayers' dime. And they criticized the consumer bureau concept for regulating many more kinds of credit than the mortgages that got people into trouble.
'Wall Street Got By Pretty Darn Good'
Some liberal Democrats were unhappy, too.
"Wall Street got by pretty darn good in this bill," said Iowa Democrat Tom Harkin, who was among the many lawmakers who sought to make the bill tougher but never even got their amendments to the floor. "Like I said, it's better than what we have got now, but not by a heck of a lot."
Harkin wanted to cap banking fees at ATMs. Other lawmakers sought to cap the size of banks altogether. And many wanted to bolster the bill's provisions restricting commercial banks from getting involved in risky trading.
House and Senate lawmakers will next hash out the major differences between their bills in a conference. But the hashing could take four more weeks, and Republicans like New Hampshire's Judd Gregg were less than optimistic that some of the more controversial provisions of the bill would change.
"One can always hope that a conference can improve things, but that's kind of a check-in-the-mail kind of situation," Gregg said.