Barack Obama wins battle to put brakes on Wall Street banks

Barack Obama was celebrating victory today after sweeping banking reforms designed to ensure the American people never again pay "for Wall Street's mistakes" were passed by the US Senate.

The changes will impose new restraints on banks, make it easier to close large, failing institutions, and set up a watchdog to identify potential crises. The intention is to avoid another meltdown of Wall Street investment banks and the resulting costly bailouts.

The Bill will also introduce provisions to ensure that borrowers are required to prove that they genuinely have the ability to repay their mortgages and measures which aim to reform the complex derivatives market.

Although the Bill, described as the biggest overhaul of US financial regulations since the Thirties, could be changed before becoming law, Mr Obama last night hailed the Senate vote as a victory for the people over the vested interests of the US financial sector.

"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," he said.

"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."

The Bill, passed by 59 votes to 39, must be merged with a measure approved in December by the House of Representatives before a package can go to Mr Obama to be signed into law.

Flashpoints in the House-Senate negotiations are likely to include a proposal to curb bank swap-trading. Some observers believe a deal could be reached before the July 4 independence day holiday, although Mr Obama admitted some battles still lay ahead.

"We've still go some work to do," he said. "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."

A Republican opponent, Senator Richard Shelby, insisted the reforms would backfire and harm prosperity.

"The decisions we've made will have an impact on the lives of Americans for decades to come," he said. "Judgment will not be rendered by self-congratulatory press releases but, rather, by the marketplace. And the marketplace does not give credit for good intentions."

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