US Senate backs Wall Street reforms

President Obama has pushed the case for more government regulation of big banks (AP)
12 April 2012

The Senate has passed a sweeping overhaul of how the US government regulates banks and Wall Street.

The legislation is aimed at preventing a repeat of the financial meltdown two years ago that plunged the nation into a deep recession.

The 59-39 vote represents an important achievement for President Barack Obama, and comes just two months after his health care overhaul became law.

The bill now must be merged with a House of Representatives version, and a key House negotiator predicts the bill will reach Mr Obama's desk by July 4.

The legislation aims to prevent a recurrence of the near-meltdown of big Wall Street investment banks and the resulting costly bailouts. It calls for new ways to watch for risks in the financial system and makes it easier to liquidate large failing financial firms.

It also writes new rules for complex securities blamed for helping precipitate the 2008 economic crisis, and creates a new consumer protection agency. It would impose new restraints on the largest, most interconnected banks and demand proof that borrowers could pay for the simplest of mortgages.

"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," Mr Obama said, adding that the financial industry had tried to stop the new regulations "with hordes of lobbyists and millions of dollars in ads".

It was solidly supported by Obama's Democratic Party, while will hope to use it as a high-water mark of reform when they campaign the the November elections. Republicans uniformly opposed the bill at every turn.

Only two Democrats voted against the bill, and four Republicans broke ranks with their party to support it. The Senate twice had to beat back efforts by Republicans to delay the bill before achieving final passage.

"The decisions we've made will have an impact on the lives of Americans for decades to come," said Republican Sen. Richard Shelby, who voted against the legislation. "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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