WASHINGTON – Congress on Thursday passed the stiffest restrictions on banks and Wall Street since the Great Depression, clamping down on lending practices and expanding consumer protections to prevent a repeat of the 2008 meltdown that knocked the economy to its knees.

A year in the making and 22 months after the collapse of Lehman Brothers triggered a worldwide panic in credit and other markets, the bill cleared its final hurdle with a 60-39 Senate vote.

Maine Sens. Olympia Snowe and Susan Collins were among only three Republicans who voted for the bill, along with Massachusetts Sen. Scott Brown. Democratic Sen. Russ Feingold of Wisconsin, who has said the bill is not tough enough, voted with most Republicans against it.

The bill now goes to the White House for President Obama’s signature, expected as early as Wednesday.

The law will give the government new powers to break up companies that threaten the economy, create a Consumer Financial Protection Bureau to guard consumers in their financial transactions, and shine a light into shadow financial markets that escaped the oversight of regulators.

From storefront payday lenders to the biggest banking and investment houses on Wall Street, few players in the financial world are immune to the bill’s reach. Consumer and investor transactions, whether simple debit card swipes or the most complex securities trades, face new safeguards or restrictions.


A powerful council of regulators will be on the lookout for risks across the finance system. Large, failing financial institutions will be liquidated and the costs assessed on their surviving peers. The Federal Reserve is getting new powers while falling under greater congressional scrutiny.

At an eye-glazing 390,000 words — half the size of the King James Bible — the legislation doesn’t offer a quick remedy, however. Rather, it lays down prescriptions for regulators to act. In many cases, the real impact won’t be felt for years.

“I’m about to sign Wall Street reform into law, to protect consumers and lay the foundation for a stronger and safer financial system, one that is innovative, creative, competitive and far less prone to panic and collapse,” Obama said. Republicans said the bill is a vast federal overreach that will drive financial-sector jobs overseas.

Snowe, the ranking member of the Senate Committee on Small Business and Entrepreneurship and a senior member of the Senate Finance Committee, described the bill as “not perfect (but) a strong step forward to achieve meaningful regulatory reform and restore confidence in the American financial system.”

“It is clear we can no longer continue with the status quo on Wall Street,” Snowe said after the vote. “Today, the Senate finally acted in a bipartisan fashion to advance a (bill) that will ensure the continued safety and soundness of the American financial regulatory system.”

Snowe said the legislation guarantees transparency and accountability and provides vital protections from the “greedy and reckless Wall Street practices that contributed to this epic economic downturn.”


A core provision of the bill creates a council of regulators, the Financial Stability Council, to serve as a systemic-risk monitor, similar to legislation that Collins introduced in March 2009.

“This council will identify financial institutions, practices and products that pose a risk to financial markets or to our economy,” Collins said. “This council will help prevent regulatory ‘black holes’ and ensure more effective oversight of our financial system.”

In particular, Collins said, the council will target lax mortgage lending standards and the explosive growth of credit default swaps that helped to trigger the latest economic crisis.

The legislation also gives the federal government tools to ensure that the failure of a single private institution won’t wreak havoc on the world’s financial system and drive the economy into recession, Snowe said.

“This bill implements a strong derivatives regulation that will push the vast derivatives-trading market onto transparent exchanges, eliminating any chance that taxpayer money will be used to support misplaced bets,” Snowe said.

Snowe authored four amendments to the bill that were designed to temper burdensome community bank regulations and improve access to credit for small businesses. All were approved by unanimous consent and included in the measure.


The legislation also includes an amendment authored by Collins that aims to strengthen capital requirements for large financial institutions.

“It is critical that large institutions be required to have adequate capital to prevent future taxpayer bailouts and to tackle the ‘too big to fail’ problem,” Collins said. “This will strengthen the economic foundation of these firms and help prevent future economic crises.”

Collins said she is disappointed that, despite her efforts, the bill fails to address the “dysfunctional operations” of Freddie Mac and Fannie Mae, which were major contributors to the collapse of the nation’s housing market. “Congress must tackle the reform of Freddie and Fannie in subsequent legislation,” she said.


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