The Senate gave final approval to a 2,300 page financial reform bill Thursday after over a year of craftsmanship, concessions, and marathon debates. President Obama is expected to sign the bill as early as this weekend, putting into law unprecedented regulations on Wall Street and protection for consumers.
The final version of the bill passed in the Senate by a 60-39 vote. Sen. Robert Byrd's death two weeks ago left a seat vacant, forcing the Democrats to scramble this week to ensure that they had enough votes for passage.
Three Republicans crossed the aisle to give Democrats the necessary 60 votes to end debate and to pass the bill. Massachusetts Sen. Scott Brown voted for financial reform after a multi-billion dollar bank tax was removed. Maine Republican Sens. Olympia Snowe and Susan Collins also voted for the bill.
The only Democrat to break party lines and vote against the bill was Wisconsin Sen. Russ Feingold who argued the massive legislation doesn't adequately crack down on Wall Street. "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," Feingold said in a statement.
The legislation, sponsored by Connecticut Sen. Chris Dodd and Massachusetts Rep. Barney Frank, aims to prevent big banks from becoming too big to fail, bulks up the authority of the Federal Trade Commission and the Federal Reserve, gives the Securities and Exchange Commission new oversight over hedge funds and credit rating agencies, and requires large companies to provide "funeral plans" to ensure a safe and accountable shut down should the company fail.
The most significant part of the bill is the creation of the Consumer Financial Protection Bureau; an independent agency tasked with shielding consumers from rotten and deceptive financial products, like faulty loans or mortgages, and which will enforce rules on banks and mortgage companies. The bureau will be accountable to Congress, but will have an independent leader appointed by the president and confirmed by the Senate.
The new agency comes with a couple carve-outs. While auto loans are covered by the bill, the protection bureau will not supervise auto dealers who help their customer finance car loans. The Senate version included a provision exempting dealer-assisted financing from the bureau's oversight. The idea had been inserted in the House version by California GOP Rep. John Campbell, who argued that dealers are not bankers and so should be left out. Campbell's effort was aided by grassroots lobbying by the National Automobile Dealers Association. Ed Tonkin, the association's chairman, says he was weary of the agency. "Nobody knows how far the tentacles the consumer financial protection bureau will reach," he says. "It's a black hole for everybody and that was scary."
Pay-day lenders and pawnbrokers will also be excluded from the bureau's oversight, drawing criticism from consumer advocacy groups. The Center for Responsible Lending, for example, argues that these types of middle-man lenders contributed to the financial crisis and therefore should be reined in.
For now, most Democrats count the passage as a success and even the bill's author acknowledged the implications of the bill remain to be seen. "It is not a perfect bill, I will be the first to admit that," Dodd, who is retiring, said on the Senate floor on Wednesday. "It will take the next economic crisis, as certainly it will come, to determine whether or not the provisions of this bill will actually provide this generation or the next generation of regulators with the tools necessary to minimize the effects of that crisis."