Senate OKs financial-reform legislation
The bill is designed to help prevent crises like the 2008 financial panic. Stocks sold off ahead of passage. The bill must be reconciled with a House-passed bill.
Updated at 9:45 p.m. ET.
Senate Democrats finally got what they wanted today: They won a vote to end debate on financial reform legislation. In the evening, they were finally able to get the reform bill itself passed.
The legislation, the biggest overhaul of financial regulation since the Great Depression, is intended to prevent a repeat of the 2008 crisis.
Democratic congressional leaders and the Obama
administration must now work to combine the Senate bill with a version approved by the House in December, a process expected to take several weeks.
The bill's passage could produce a dramatic day on Wall Street. Traders will be watching to see if Germany's parliament approves a $1 trillion rescue package for Greece.
And then there will be the market reaction to the Senate votes today. The prospect of passage turned a nasty day for stocks into a full rout, with financial stocks taking a pounding. The Dow Jones industrials ($INDU) fell 376 points to 10,058. Asian stocks opened sharply lower in Friday trading.
But some analysts argued that the financial stocks may stabilize because clarity about financial reform is starting to emerge.
Passage was assured after the Senate voted to close debate over the legislation. A vote Wednesday failed after several Democratic senators voted no to give their own amendments more time in the sun.
Today, Democrats had exactly the 60 nods they needed.
One valuable addition to the "yes" column was Massachusetts Republican Scott Brown, who changed his vote today after winning promises that mutual fund companies in his state wouldn't be affected by trading limits the bill puts on big banks, The Wall Street Journal reported.
Brown and two other Republicans -- Sens. Susan Collins and Olympia Snowe -- voted to end debate, The Journal reported. Two Democrats and 38 Republicans were against it.
There are lots of moving parts here. Many amendments are still under consideration, including a proposal to exempt car dealers from being regulated by the new consumer protection agency, The Journal reported.
The overall financial reform would bring about some big changes in Washington. It would form a consumer-protection agency at the Federal Reserve and keep a closer eye on hedge funds and derivatives.
Finally, the bill would also create a new system and authority for regulators to liquidate large failed institutions. Current law prevented regulators from taking control of troubled giants, including American International Group (AIG) and Citigroup (C). Because their collapse might have seized up the global economy, the government was forced to spend billions of dollars to bail the companies out.
Democrats argued that change was needed to prevent future financial crises and mega-bailouts.
Controversy is still swirling around an amendment that would force banks to spin off their derivatives business into separate companies. That language is still in the bill, but banks are hoping that another amendment, proposed by Sen. Judd Gregg, R-N.H., will strike out that language entirely, Politico reports.
Even with today's vote, the sausage-making will continue. Lawmakers will need to mesh the Senate bill with the one the House approved several months ago -- and then both groups will need to vote again on the legislation before sending it to President Obama for approval.
Ezra Klein at The Washington Post wrote that he believe Reid was wrong to be slamming this through the Senate this week. Instead of getting tweaked and analyzed in committees, this bill breezed through the Banking Committee with the idea of amending it on the Senate floor, he writes. The Senate needs to spend more time getting this bill right, Klein adds.
Charley Blaine contributed to this report.
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