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US Financial Reform Moves Ahead

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Passage of a bill to reform laws governing U.S. banks, lenders, credit-card firms and other parts of the financial industry will not end debate on the issue, just change its location.

Democratic supporters of the legislation, their Republican opponents and the financial industry had already been squabbling over the bill for a year when the Senate gave it final legislative approval Thursday.  

The reform bill is aimed at preventing the types of problems that caused the financial crisis nearly two years ago.  President Barack Obama is expected to sign it into law next week.

The text of the financial reform act already fills more than 2,300 pages, but many rules and regulations needed to implement it have not yet been written.  This work by U.S. regulators is expected to take months or even years.

Financial companies waged an extensive campaign to soften the bill in Congress.  Their lobbying effort now is expected to target the agencies that are crafting the new rules.

The new law will allow the government to seize failing financial institutions if they are so large that their collapse would hurt the economy.  The government would re-sell the seized properties to ensure that bank shareholders and creditors would bear any losses, not American taxpayers.

Banks also will be required to keep more money on hand to cover potential losses from bad investments, and there will be more disclosure of complex transactions called derivatives.  The new laws are intended to rein in some of the most speculative trading and offer new consumer protections.

President Obama praised the Senate for passing the biggest financial rules overhaul in decades, saying the American people will never again be asked to pay for Wall Street's mistakes.  

Opposition Republicans fought the reforms and said the new rules would hurt the economy, expand government power and fail to protect taxpayers.

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