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Congress on Thursday passed the stiffest
restrictions on banks and Wall Street since the Great Depression,
clamping down on lending practices and expanding consumer
protections.


      A year in the making and 22 months after the collapse of Lehman
Brothers triggered a worldwide panic in credit and other markets,
the bill cleared its final hurdle with a 60-39 Senate vote. It now
goes to the White House for President Barack Obama's signature,
expected as early as Wednesday.


      The law will give the government new powers to break up
companies that threaten the economy, create a new agency to guard
consumers in their financial transactions and shine a light into
shadow financial markets that escaped the oversight of regulators.


      Large, failing financial institutions would be liquidated and
the costs assessed on their surviving peers. The Federal Reserve is
getting new powers while falling under greater congressional
scrutiny.


      From storefront payday lenders to the biggest banking and
investment houses on Wall Street, few players in the financial
world are immune to the bill's reach. Consumer and investor
transactions, whether simple debit card swipes or the most complex
securities trades, face new safeguards or restrictions.


      "When this earthquake hit, there wasn't nearly enough
oversight, transparency or accountability to shield us from the
fallout," Senate Majority Leader Harry Reid said. "This law will
strengthen all three."


      Republicans said it is a vast federal overreach that will drive
financial-sector jobs overseas. Before the final vote was even
cast, House Republican Leader John Boehner called for its repeal.


      At an eye-glazing 390,000 words - half the size of the King
James Bible - the legislation doesn't offer a quick remedy,
however. Rather, it lays down prescriptions for regulators to act.
In many cases, the real impact won't be felt for years.


      One of the top regulators who will be charged with implementing
the law, Federal Reserve Chairman Ben Bernanke, said the Senate
vote represents a "far-reaching step toward preventing a replay of
the recent financial crisis."


      The Senate's final passage of the bill, two weeks after the
House approved it, is a welcome achievement for a president and
congressional Democrats, both increasingly unpopular with voters
four months from midterm elections that threaten to put Republicans
in charge of Congress. Only three Republicans voted for it - Maine
Sens. Olympia Snowe and Susan Collins, and Massachusetts Sen. Scott
Brown. Democratic Sen. Russ Feingold of Wisconsin, who has said the
bill is not tough enough, voted with most Republicans against it.


      The law has been a priority for Obama, ranking just behind his
health car overhaul enacted in March. In its final form, the
package hews closely to the plan unwrapped a year ago by the White
House and in some ways is even tougher. White House spokesman
Robert Gibbs promptly cast the vote in political terms.


      "This will be a vote that Democrats will talk about through
November as a way of highlighting the choice that people will get
to make in 2010," he said.


      The political benefits, however, stand to be overshadowed by
lingering high unemployment. And Republicans were betting that
public antipathy toward big government and worries over jobs would
trump their anger at Wall Street.


      "We're going to be driving jobs and business overseas with this
massive piece of legislation," said Sen. Saxby Chambliss, R-Ga.


      Sen. Richard Shelby, R-ala., who worked with Dodd on certain
aspects of the bill, denounced it as a "legislative monster."


      Named after Connecticut Sen. Christopher Dodd and Massachusetts
Rep. Barney Frank, the Democratic committee chairmen who steered it
to passage, the legislation ends a trend to ease regulations that
peaked in 1999 with the elimination of Depression-era walls
separating commercial banking from riskier investment banking.


      And though it calls for the biggest changes in generations, it
does not approach the scope of the New Deal banking rules enacted
under President Franklin Delano Roosevelt. That era saw the
creation of the Federal Deposit Insurance Corp., to protect
consumer deposits, and the Securities and Exchange Commission to
oversee the markets.


      The Dodd-Frank law will create a Consumer Financial Protection
Bureau empowered to write and enforce regulations covering
mortgages, credit cards, and other financial products. Lenders face
new restrictions on the type of mortgages they write and could not
be rewarded for steering borrowers to higher cost loans.


      Borrowers are to be protected from hidden fees and abusive
terms, but also will have to provide evidence that they can repay
their loans, thus halting the no-document loans that had flooded
the markets.


      The vote Thursday capped a year of partisan struggles and
cross-party courtship. Any remaining uncertainty about the bill's
fate vanished earlier this week when it became clear three
Republican senators would vote for it, thus assuring 60 votes to
overcome procedural obstacles.


      Industry lobbyists fought against a number of restrictions in
the bill, ultimately winning some concessions. In the end, the
final bill was tougher than they wanted but not as restrictive as
they feared.


      "The result will be over 5,000 pages of new regulations on
traditional banks and years of uncertainty as to what the massive
new rules will mean," said Edward Yingling, president and CEO of
the American Bankers' Association.


      Republican opponents also criticized the bill for not addressing
mortgage financing giants Fannie Mae and Freddie Mac, whose
questionable lending helped start a collapse in the housing market.


      Some supporters of the bill also voiced reservations, claiming
the bill did not give regulators specific direction on how to
implement and enforce new rules.


      "Congress largely has decided instead to punt decisions to the
regulators, saddling them with a mountain of rule-makings and
studies," said Sen. Ted Kaufman, D-Del.


      For all its ambition and reach, the legislation is dotted with
exceptions.


      Community banks won't have to be examined by the new consumer
bureau and would get a break on higher insurance premiums. Despite
calls to end proprietary trading by large banks, the law will let
them put up to 3 percent of their capital in hedge funds or private
equity funds. Auto dealers won't be covered by the rules of the
consumer bureau.


      "It is not a perfect bill, I will be the first to admit that,"
Dodd said. "It will take the next economic crisis, as certainly it
will come, to determine whether or not the provisions of this bill
will actually provide this generation or the next generation of
regulators with the tools necessary to minimize the effects of that
crisis."
      

Gallery

Bank bill gets patched up, moves closer to passage

House, Senate lawmakers finalize deal on bank bill

Politics and Government News

Congress sent legislation to President Barack
Obama Thursday that imposes sweeping new regulations on Wall Street
and creates new protections for millions of consumers.

Congress sends Obama sweeping Wall Street bill

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