The Senate on Thursday voted 60-39 to approve the most sweeping overhaul of the nation’s financial regulatory system since the Great Depression, clearing the historic legislation for President Barack Obama to sign into law.
Congressional passage of the 2,323-page bill is a striking triumph for Obama, the third landmark legislative victory of his 18-month-old presidency. Like the other two — last year’s $862 billion economic stimulus and the health care overhaul approved earlier this year — it came with virtually no Republican support.
The financial overhaul bill aims to put new government rules and tools in place to prevent a repeat of the 2008 financial industry meltdown that helped send the nation’s economy reeling into what’s been called the Great Recession, whose ill effects still linger.
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“It is not a perfect bill. I will be the first to admit that,” said Senate Banking Committee Chairman Christopher Dodd, D-Conn. “But we believe we have done the best we could under the circumstances to see to it we never have another bailout of a major financial institution at taxpayer expense.”
Treasury Secretary Timothy Geithner hailed the legislation and its primary authors, Dodd and House Financial Services Committee Chairman Barney Frank, D-Mass.: “The Dodd-Frank reforms will put in place new rules of the road for America’s banks; to protect the financial security of Americans; to protect consumers and investors from fraud and abuse; and to enable businesses to finance future innovation and investment. These rules will make sure that banks – not the taxpayers – will pay for future bank failures.”
Republicans wouldn’t relent in opposition; thirty-eight of them voted against the bill. Republicans Olympia Snowe and Susan Collins of Maine and Scott Brown of Massachusetts joined 55 Democrats and two independents in voting yes. Sen. Russell Feingold, D-Wis., was the only Democrat to vote no, saying the bill was not tough enough on Wall Street.
“Washington once again caved to Wall Street on key issues and produced a bill that fails to protect the American people from the pain of another economic disaster,” he said.
Most GOP senators insisted that the Senate was making a grave mistake, but for different reasons than Feingold’s.
Sen. Richard Shelby of Alabama, the top Republican on the Banking Committee, labeled the bill a “legislative monster that I believe…expands the scope and the power of ineffective bureaucracies….the bill does very little to make our financial system safer.”
Republicans tried to extend debate on the bill; that effort failed 60 to 38.
The House of Representatives passed the bill last month. Obama is expected to sign it into law within days.
The bill, the product of painstaking negotiations — largely among Democrats — would set up a new consumer agency to write rules for credit products such as mortgages, student loans and credit cards; require federally insured financial institutions to spin off riskier investments and make it easier for the government to break up large institutions that have financial problems.
That breakup authority is considered one of the bill’s most significant changes. During the 2008 economic collapse, the only option for troubled firms was bankruptcy, but that would have put shareholders and creditors at odds with one another and sowed doubt throughout the financial world, perhaps spreading panic.
Thursday, the differences between the two parties over the bill remained stark, and the debate throughout the day was one likely to be heard on the campaign trail in the three and one-half months until the Nov. 2 congressional elections.
“As it turns out, the American people don’t seem to like this government-driven solution to the financial crisis any more than they liked the Democrats’ government-driven solution to the nation’s health care crisis,” said Senate Republican Leader Mitch McConnell of Kentucky.
“They don’t think this bill will solve the problems in the financial sector any more than they think the health care bill will lead to lower costs or better care.”
Democrats readily conceded that the bill wasn’t perfect, but contended that should be seen as an important, even bold, step toward curbing potential abuses.
“This bill corrects a regulatory structure that today allows reckless gambling on Wall Street, that creates too-big-to-fail, where government bailouts are necessary to keep companies afloat because there’s no other option,” said Sen. Ben Cardin, D-Md.
One of the Republicans’ key arguments was that no one knows if the bill could prevent a 2008-style collapse.
“The Democratic majority chose to adopt legislative language penned by federal regulators in search of expanded turf,” Shelby charged. “They chose to legislate for the political favor of community organizer groups and liberal activists seeking expansive new bureaucracies.”
Countered Dodd, “I can’t legislate integrity. I can’t legislate wisdom. I can’t legislate passion or competency.
“What we can do is create the tools and the architecture that allow good people to do a good job on behalf of the American public.”