The US Senate has passed the largest overhaul of financial industry rules since the 1930s to curb Wall Street excesses blamed for plunging the world into economic meltdown.
Reforming the financial industry is one of President Barack Obama’s top domestic goals, and this is a major success for him.
The legislation was passed with 59 votes to 39 and has widespread backing from a public angry with the banking industry and huge taxpayer bailouts.
It aims to rein in big firms’ use of high-risk practices blamed for the economic crisis of 2008 and end taxpayer-funded bailouts of financial institutions previously deemed “too big to fail”.
A new consumer protection agency will also be created to shield US citizens from industry abuses and banks’ ability to deal in financial tools like derivatives will face restrictions.
Before the President can sign the bill into law it must be merged with a version approved by the House of Representatives in December.
Barney Frank, the chair of the House Financial Services Committee, expects this process to be completed quickly.
“The President, I am certain now, will have signed this bill well before the Fourth of July,” he said.
Earlier on Thursday Obama had encouraged senators to pass the legislation, denying it would damage the US economy.
“The reform I sign will not stifle the power of the free market, it will simply bring predictable, responsible, sensible rules into the marketplace,” he said.
“Our goal is not to punish the banks, but to protect the larger economy and the American people from the kind of upheavals that we’ve seen in the past few years.”
The President also accused the US financial industry of trying to kill the bill with “hordes of lobbyists and million of dollars”.
“Today, I think it’s fair to say that these efforts have failed,” he said.
Some Republicans claim the bill will interfere in the free market and stifle the economy.
Republican Senator Judd Gregg said the measures would have a “chilling effect on the ability of American families and businesses to access credit” because of layers of “unnecessary” regulations on financial institutions.
By Jonathan Robins – Sky News Online
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