In a 60-39 vote, the Senate today approved a landmark overhaul of financial system oversight that includes a new entity to protect consumers carrying the most common loan products, including credit cards and mortgages.
Nearly two years since the onset of the financial crisis – the Wall Street reform legislation now awaits the signature of President Obama, who has been pushing for the new regulations, despite unrelenting opposition from banking and business groups.
Three Republicans earned the president’s praise for joining Democratic senators in approving the historic measures: Scott Brown of Massachusetts, and Susan Collins and Olympia Snowe, both of Maine.
The trio did so at a political cost. Republicans opposed most of the measures, criticizing key components that they claim do not end the “too big to fail” bailout mindset that has governed Washington, D.C.’s response to faltering institutions considered vital to economic stability.
Republicans said the reform would unnecessarily grow government and punishes businesses that had nothing to do with the financial crisis.
“So here’s a bill that fails to address the root causes of the kind of crisis it’s meant to prevent,” Senate Republican Leader Mitch McConnell said. “This is a bill that creates a vast new and unaccountable bureaucracy that, if past experience is any guide, will lead to countless burdensome, unintended consequences for individuals and small businesses, that will constrict credit and stifle growth in the middle of the worst economic period in memory.”
In recent weeks, a House-Senate conference committee made up of members from both parties hatched out some differences over reform key provisions.
To cover the estimated $19 billion cost of the reform over the next ten years, the new regulatory framework effectively ends the $700 billion Troubled Asset Relief Program, TARP, the government’s primary bailout source since the fall of 2008.
“We’re giving consumers and taxpayers the strongest protections they’ve ever had,” said Senate Majority Leader Harry Reid. “We’re giving Wall Street the strongest oversight it’s ever had – not to stifle it, but to safeguard us.”
Two key components of the reform are an oversight council of regulators with the power to liquidate a failing financial firm deemed a threat to the economy, and a consumer financial protection agency that would be housed within the Federal Reserve but retain mostly autonomous authority over providers of credit cards, mortgages and payday loans.
The bureau will have the authority to examine and enforce regulations for banks and credit unions with assets of more than $10 billion; all mortgage-related businesses; and large non-bank financial companies, such as large payday lenders, debt collectors, and consumer reporting agencies. Banks with assets of $10 billion or less will be examined by the appropriate bank regulator.
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