The Senate voted 60-to-39 to approve the Dodd-Frank Wall Street Reform and Consumer Protection Act (HR 4173). The bill, which President Obama is expected to sign, passed largely along party lines.
Senate Banking Committee chairman Christopher Dodd, D-Conn., admitted that “it’s not a perfect bill,” but added, “we believe we’ve done the best we could.” Sen. Richard Shelby, R-Ala., ranking member of the Senate Banking Committee, said the legislation would result in higher fees, restricted access to credit and a larger regulatory burden on businesses. “This is not real reform, just more of the same,” Shelby said. Republicans have criticized the bill for its failure to include reform of the Government Sponsored Enterprises.
Senate Majority Leader Harry Reid, D-Nev., said the Dodd-Frank Act is “about fairness and justice. It’s about making sure there’s not a next time. It’s about jobs. And it’s about rescuing our economy.”
The broad overhaul of financial regulation includes the creation of a new consumer protection bureau housed within the Federal Reserve, oversight of the derivatives market and an end to too-big-to-fail taxpayer funded bailouts. It also creates a 10-member Financial Services Oversight Council to monitor threats to the financial system, and allows banks to invest up to 3 percent of their capital in private equity and hedge funds. In order to cover the cost of financial reform, the Troubled Asset Relief Program (TARP) will be ended ahead of schedule, while banks with assets over $10 billion will pay increased premiums to the Federal Deposit Insurance Corporation (FDIC).
The American Bankers Association said the legislation was “overloaded with new rules and restrictions on traditional banks that did not cause the financial crisis.” The association predicted “years of uncertainty” as to what the new rules will mean. According to Senate Minority Leader Mitch McConnell, R-Ky., the bill will impose 533 new regulations on individuals and small businesses. “The White House will call this a victory,” McConnell said, “but as credit tightens, regulations multiply and job creation slows even further as a result of this bill, they’ll have a hard time convincing the American people that this is a victory for them.”
FDIC Chair Sheila Bair noted that now that the bill has passed, responsibility shifts to regulators to implement the law in “a manner that is aligned with its principles.” Bair said the FDIC will move “swiftly and deliberately” through the various rulemakings and studies required under the bill.
By Sarah Borchersen-Keto, CCH News Staff