President Barack Obama will be calling on the global community to work together on financial reforms, saying that the global economic meltdown shows that the world economies are inextricably linked. The president will showcase to G-20 leaders the tough proposed reforms in the United States that some in the U.S. Congress hope will soon become law.
Lawmakers from both chambers of Congress worked early into Friday in a marathon session to reconcile House and Senate versions of legislation on the toughest financial reform in the United States since the 1930s.
"I declare the bill passed and the conference committee is now adjourned," said Congressman Barney Frank.
The agreement came at dawn Friday, hours before Mr. Obama headed to Canada for the global economic talks.
Senator Chris Dodd, a Connecticut Democrat who headed the Senate side of the talks, says the bill strengthens the hand of Mr. Obama at the G-20 summit.
During the marathon talks, some lawmakers expressed concern about what action G-20 countries would take and whether those nations would adopt similar restrictions, so the U.S. would not be at a disadvantage on the world stage. The vote early Friday was along party lines.
Representative Spencer Bachus, an Alabama Republican, called for such reforms from the U.S. global partners.
"When something is as important as the competitiveness of our U.S. companies on a global economy is at stake, we need more than vague promises and assurances that we're not acting alone," said Bachus.
Fellow Republican Representative Ed Royce of California, agreed. "This is a competitive issue for the United States. If we're not going to have the G-20 go down this same road, we're going to lose jobs in the United States as a consequence," Royce said.
The bill puts in place the toughest-ever consumer financial protections and creates an independent agency to enforce them. It also imposes higher capital requirements on banks, regulates the derivatives market, ends "too big to fail" bailouts and establishes an early warning system to predict and prevent the next financial crisis.
Peter Morici, an economist and professor at the University of Maryland, says President Obama will have to impress upon G-20 leaders that he is serious about enforcing the regulations and will have to make the case that the global community needs similar reform, if the U.S. legislation is to succeed.
"Most importantly, in order for it to work, other banks around the world will have to be held to the same standards," said Morici.
Treasury Secretary Timothy Geithner says the legislation shows that the United States is ready to lead by example in the world stage and brings "crucial momentum for global financial reform."
Democrats want a final vote on the legislation next week, hoping for President Obama to sign the sweeping overhaul into law by July 4.