US financial overhaul passes Congress in major Obama victory (Roundup)

By Chris Cermak Jul 15, 2010, 20:09 GMT

Washington - Congress on Thursday approved the most sweeping overhaul of the US financial sector since the Great Depression of the 1930s, hoping to end Wall Street's riskiest practices and handing a major victory to President Barack Obama.

The Senate's 60-39 vote in favour of the broad reforms sends the landmark legislation to Obama's desk for signature. The lower House of Representatives passed the bill last month.

Obama made the reforms a top priority in the wake of the 2008 financial crisis. He is expected to sign the bill into law next week, marking 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 kind of excessive risk-taking 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.

'It is a big step forward,' said White House spokesman Robert Gibbs ahead of the final Senate vote. 'We cannot continue to operate using the same rules that got us into this mess.'

European leaders in particular had demanded that the United States clamp down on shady 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, all from north-eastern states that lean Democratic, joined 57 Democrats in voting for the bill. One Democrat, Russ Feingold, opposed the reforms.

Wall Street, worried about profits, was luke-warm to the reforms and lobbied 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.

The US public has been broadly supportive of the Wall Street overhaul, though a 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.