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UPDATE: Senate Passes Financial Reform

July 15, 2010 - by Donny Shaw

UPDATE: The bill has officially been passed. It now gets sent to President Obama, who is expected to sign it into law this afternoon. Original post below…

As expected, the Senate this afternoon voted 60-38 to end debate on the landmark Dodd-Frank Wall Street Reform and Consumer Protections Act. The vote on final passage of the bill, whiconly requires a simply majority of 51 “ayes,” is expected later this afternoon.

This is a big, sweeping bill that was crafted as a direct response to the 2008 financial crisis. It seeks to develop a better system for identifying emerging risks in the financial markets, end too big to fail and taxpayers bailouts, regulate the derivatives market, protect consumers from predatory lenders, make the Federal Reserve more transparent, and more. The effectiveness of a lot of the provisions in the bill will ultimately be determined by regulatory agencies who, as soon as the bill is law, will begin writing hundreds of specific rules on how to implement the bill. The regulators have a significant amount of discretion in how the details of the bill are interpreted. And you know what they say about details…

Reuters is calling this bill “the broadest overhaul of U.S. financial rules since the Great Depression.” And that’s certainly true. But it’s not saying much given the cycle of financial deregulation the U.S. has been caught up in over the past several decades and that lead up to the credit crisis of 2006-2007 and the collapse of 2008.

All Democrats besides Sen. Russell Feingold [D, WI] voted in favor of the bill. In a statement posted on his website, Feingold said that he believed the bill was not strong enough to prevent the next crisis. “Washington once again caved to Wall Street on key issues and produced a bill that fails to protect the American people from the pain of another economic disaster,” he said.

Three Republicans voted with the Democrats on the bill, giving them the 60 votes they needed to end a Republican-led filibuster — Sen. Scott Brown [R, MA], Sen. Susan Collins [R, ME] and Sen. Olympia Snowe [R, ME].

For more detailed information on the bill, see the Democrats’ Banking Committee summary, Americans for Financial Reform’s take, the Roosevelt Institute’s round-up, or the OpenCongress Blog financial reform portal.

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