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Senate Passes Historic Wall Street Overhaul

May 22, 2010

More accountability.

Agence France Press

May 20, 2010

In a major victory for President Obama, the US Senate passed the most sweeping overhaul of financial industry rules since the Great Depression of the 1930s.

WASHINGTON (AFP) – In a major victory for President Barack Obama, the US Senate passed the most sweeping overhaul of financial industry rules since the Great Depression of the 1930s.

By a 59-39 margin, lawmakers approved an ambitious effort to curb Wall Street excesses blamed for fueling the 2008 global economic meltdown, amid smoldering voter anger months before November mid-term elections.

The legislation, Obama’s top domestic goal, must still be merged with the House of Representatives’ rival version into a compromise measure before the final package can go to the president to sign into law.

House Financial Services Committee chair Barney Frank, a Democrat, told CNBC television that he foresaw smooth sailing and that “the president, I am certain now, will have signed this bill well before the Fourth of July.”

The measure aims to rein in big firms’ use of high-risk practices blamed for the collapse of 2008, end taxpayer-funded bailout of financial titans previously deemed “too big to fail,” and create an unprecedented consumer protection agency to shield Americans from industry abuses.

It also aims to curb big banks’ lucrative, largely unregulated business in complex securities called derivatives, essentially bets on the future cost of an asset, which many businesses use to control risk from volatile prices.

And it includes several measures aimed at increasing the transparency at the US Federal Reserve and the central bank’s accountability.

A few hours before the vote, after the Senate had cleared a key procedural hurdle, Obama had delivered a final legislative call to arms on the measure’s behalf and a rebuke to critics who say it will smother the market.

“The reform I sign will not stifle the power of the free market — it will simply bring predictable, responsible, sensible rules into the marketplace,” he said in the Rose Garden of the White House.

“Our goal is not to punish the banks, but to protect the larger economy and the American people from the kind of upheavals that we?ve seen in the past few years,” said the president.

Obama also took aim at the financial industry, accusing it of deploying “hordes of lobbyists and millions of dollars in ads” to kill the bill and then trying to “water it down.”

“I think it’s fair to say that these efforts have failed,” he said.

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