US financial overhaul assured after key Senate vote (3rd Lead)

Jul 15, 2010, 18:45 GMT

Washington - Congress was poised on Thursday to approve the most sweeping overhaul of the US financial sector since the Great Depression of the 1930s, in what would be a major victory for President Barack Obama.

The Senate voted 60-38 to close debate on the landmark bill, clearing the way for a final vote that could come as early as Thursday afternoon. The lower House of Representatives passed the bill last month.

Obama, who made the reforms a top priority in the wake of the 2008 financial crisis, is expected to sign the bill into law next week. His signature would mark an end to more than a year of heated debate over how to reform the nation's financial sector.

The reforms aim to prevent financial firms from engaging in the risky practices that led to a near-collapse of Wall Street in 2008 and ushered in the wider global recession. Obama has championed the bill as essential to prevent a future crisis.

We cannot continue to operate using the same rules that got us into this recession,' said White House spokesman Robert Gibbs in reaction to the Senate vote.

European leaders in particular had demanded that the United States clamp down on bank practices and are in the process of considering their own round of major regulatory reforms.

The law gives the government broader oversight over hedge funds and derivatives markets and new powers to wind down failing financial firms. It creates a council of regulators to monitor systemic risks and a new consumer protection agency to prevent firms from offering misleading financial products.

While the jobs and wealth lost during the financial crisis could never be returned, 'we can see to it that we never ever again have to go through what this nation has been through,' said Senator Christopher Dodd, a key architect of the legislation.

Republicans have largely opposed the bill as over-regulation, and Obama's fellow Democrats needed 60 votes in the 100-member Senate to close debate and overcome a 'filibuster' delaying tactic meant to kill the legislation.

Senator Richard Shelby, the Republican's key financial expert, said the bill would harm the economy and he accused the Obama administration of trying to 'exploit the crisis in order to expand government further.'

Just three moderate Republicans joined 57 Democrats in voting to end debate on the bill. The final vote on passing the legislation will only need a simple majority of 50 votes.

Wall Street has been luke-warm to the reforms, fearing lower profits and lobbying for less-stringent rules. But the industry also recognized that public anger over the cost of the financial crisis meant some form of increased oversight was inevitable.

The legislation marked 'a new day for the industry,' said Steve Bartlett, head of the Financial Services Roundtable, the top lobbying association for Wall Street. 'We are committed to being a part of the solution and earning back the trust of the American public.'

Passage of the financial reform bill marks the second major domestic victory this year for Obama after health care reform. But his public approval ratings have remained below 50 per cent amid anger over the still-sluggish economy and a skyrocketing budget deficit.

A public opinion survey by Bloomberg News found that nearly four out of five Americans have little or no confidence that the reforms will prevent a future financial crisis. Democrats hope to convince them otherwise ahead of congressional elections set for November.

'I think this bill will stand the test of time, creating a new set of rules of the road for not just America's financial sector but also the world's financial sector for decades to come,' said Democratic Senator Mark Warner.