Senate approves sweeping Wall Street reform bill

WASHINGTON Fri May 21, 2010 5:42pm EDT

Chairman of the Senate Banking Committee Christopher Dodd (D-CT) and Rep. Barney Frank (D-MA) walk to the microphones to speak to the press outside the West Wing of the White House, May 21, 2010. REUTERS/Jason Reed

Chairman of the Senate Banking Committee Christopher Dodd (D-CT) and Rep. Barney Frank (D-MA) walk to the microphones to speak to the press outside the West Wing of the White House, May 21, 2010.

Credit: Reuters/Jason Reed

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WASHINGTON (Reuters) - The Senate approved a sweeping Wall Street reform bill on Thursday night, capping months of wrangling over the biggest overhaul of financial regulation since the 1930s.

By a vote of 59-39, the Senate awarded a victory to President Barack Obama, a champion of tighter rules for banks and capital markets after a 2007-2009 financial crisis that slammed the economy and led to massive taxpayer bailouts.

The Senate bill must now be merged with a measure approved in December by the House of Representatives. Only then could a final package go to Obama to be signed into law, something that analysts said may happen next month.

Changes proposed in both bills -- driven by lawmakers eager to look tough on Wall Street before congressional elections in November -- threaten to constrain the banking industry and reduce its profits for years to come.

Flashpoints in the House-Senate negotiations will likely include a controversial proposal to curb bank swap-trading.

Obama said the final version of the bill would hold financial firms accountable but not stifle the free market.

"Over the last year, the financial industry has repeatedly tried to end this reform with hordes of lobbyists and millions of dollars in ads, and when they couldn't kill it they tried to water it down. ... Today, I think it's fair to say these efforts have failed," Obama said.

"We've still got some work to do," he added. "The House and the Senate will have to iron out the differences between the two bills. And there's no doubt that during that time the financial industry and their lobbyists will keep on fighting."

DOW JONES TUMBLES

On Wall Street on Thursday, the Dow Jones industrial average slid 3.6 percent, hurt by fears of Europe's debt crisis retarding global economic recovery, but also by uncertainty over U.S. financial reform, traders said.

Barney Frank, head of a key House panel, told CNBC it was important to complete reform soon to ease uncertainty.

Frank, the Democratic author of Wall Street reform in the House, on Thursday drew an early negotiating line ahead of impending talks with the Senate on a final package.

In letters to senior Senate Democrats that were obtained by Reuters, Frank said certain House proposals on financial firm regulation and bank trading limits must be preserved.

He said the House proposals were important to his home state of Massachusetts and that "none of them threaten or weaken the broad objectives of comprehensive reform ... I will insist that they be maintained in the final bill."

The letters were addressed to Senate Democratic leader Harry Reid and Banking Committee Chairman Christopher Dodd, the Democratic author of the Senate bill. Both will likely be key players, along with Frank, in the House-Senate talks.

"I look forward to working with my colleagues in the House to produce a strong bill," Dodd said in a statement.

In the Senate vote, four Republicans sided with the Democrats for approval: Susan Collins, Olympia Snowe, Charles Grassley and Scott Brown. Two Democrats voted against the bill: Maria Cantwell and Russ Feingold.

Democrat Arlen Specter, who lost a re-election primary on Tuesday, did not vote. Nor did Democrat Robert Byrd.

"For those who wanted to protect Wall Street, it didn't work. They can no longer gamble away other people's money," Reid told reporters after the late-evening vote.

DODD HOPES FOR JULY 4 VOTE

Dodd said he hoped the Senate would be able to vote to approve a final House-Senate package by July 4.

Republicans worked to delay and water down the bill over months of closed-door negotiation and open debate, arguing it was an overreach of government into the private sector.

The Senate bill "places layer upon layer of unnecessary new regulations on financial institutions that will undoubtedly have a chilling effect on the ability of American families and businesses to access credit," said Republican Senator Judd Gregg in a statement after the vote.

Last-minute maneuvering on the Senate floor killed two controversial amendments: one to tighten proposed restrictions on risky trading by banks, and another exempting car dealers that do not finance their own lending to auto buyers from oversight by a new federal consumer watchdog.

Republicans withdrew the auto-dealer amendment, offered by Senator Sam Brownback, so that the bank trading amendment, offered by Democrats Jeff Merkley and Carl Levin, would not come to a vote. It is opposed by major financial firms.

The House bill already contains a watchdog exemption for auto dealers, opening the door to a deal in conference.

Expecting such a move, Levin told reporters beforehand that it showed "the power of Wall Street" at work in Congress.

VOLCKER RULE

The Merkley-Levin amendment would have tightened language in the Senate bill on the "Volcker rule" proposed in January by Obama and White House economic adviser Paul Volcker.

As it stands now, the bill leaves it up to regulators to write the rule's details and possibly water it down later.

Levin and Merkley -- among Democrats left not completely satisfied by the Dodd bill -- said they would push in the House-Senate conference for tightening the Volcker rule.

Dodd said he would try to strengthen the rule along the lines of the Merkley-Levin proposal in conference.

Tim Ryan, head of the Securities Industry and Financial Markets Association, said the lobbying group opposed the Senate bill and would continue working with members of Congress.

"Provisions like the so-called Volcker Rule would impose sweeping new restrictions on size and activities that were not a cause of the financial crisis," Ryan said in a statement.

As approved, the Senate bill contains a provision from Democratic Senator Blanche Lincoln that would force banks to spin off their lucrative swap trading desks into affiliates.

Major financial groups such as JPMorgan Chase, Bank of America and Goldman Sachs could be hit hard by such a requirement, analysts said.

Sheila Bair, chairman of the Federal Deposit Insurance Corp, reiterated concerns that Lincoln's approach "could increase, not decrease, risk." Analysts said it was unlikely to survive the conference. It is not in the House bill.

(Additional reporting by Thomas Ferraro, David Lawder, Patricia Zengerle, Rachelle Younglai, Matt Spetalnick and Karey Wutkowski)

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Comments (34)
axiom321 wrote:
This is good!!! We need to make our profits from productive activities and not from especulation. Prductive activities is what generates products and services to keep an standard of living.
Banks especulating does not build new roads or energy sources, it does not create more manufacturing jobs.
America it’s about productive business and innovation.

May 20, 2010 9:45pm EDT  --  Report as abuse
thomdd1959 wrote:
All Traitors who voted for the fake “Financial Overhaul Bill” are heartless cowards. Money is their God. They SOLD OUT “We the People” of the U.S.A.

“We the People” now know who BETRAYS U.S.!

It was realized that the “BANKSTERS” would have to become PARTNERS with the
POLITITIANS and that the STRUCTURE of the CARTEL would have to be a CENTRAL BANK. (The beginning of The Federal Reserve in 1913)

They are disgusting, low-life, shameful, immoral, corrupt and treacherous creatures.

“Few men have virtue to withstand the highest bidder.” –George Washington

Complete Accountability to “We the People” who hold the True Power prevents Fraud, Abuse and Corruption. Good government must ALWAYS be kept In Check.

Ron Paul has legislation ready to move forward immediately on a REAL solution.

Audit “The Fed Scam” bills HR 1207 must pass in The House and S 604 must pass in The Senate Immediately! Any Representative or Senator that does not vote in favor of and support these bills or Tries to “Water-Down” or STALL these bills is clearly a Traitor and “Sold Out” the United States of America!

“Experience has shown that even under the best forms of government those entrusted with power have, in time, and by slow operations, perverted it into tyranny.” –Thomas Jefferson

The Federal Reserve Bank is Set Up as a Privately Owned Banking Cartel Controlled by a Small Elitist Group of Powerful International Bankers. This Same Cartel Owns Other Central Banking Systems Worldwide Including the IMF (International Monetary Fund) and World Bank.

“The time is near at hand which must determine whether Americans are to be free men or slaves.” –George Washington

http://www.tomdavidd.com/blog/

May 20, 2010 10:21pm EDT  --  Report as abuse
MCiccone wrote:
Tell a farmer that trading is not a productive activity when a freeze kills all his crops, tell a single mom working two jobs that banking is not a productive activity when credit is the only thing keeping a roof over her kids head.

This bill doesn’t kill wall street, it kills main st.

Idiots that were voted for by idiots have, in one fell swoop, destroyed several industries and the majority of Americans access to credit so that they could get the same idiots that voted for them before to put them back into office.

People are dying in this country from disease, addiction and hunger. We’ve got an ecosystem being wiped out and City about to default on its debt.

And this is all our elected officials care about?

May 20, 2010 10:38pm EDT  --  Report as abuse
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