Senate Passes Financial Reform Bill, Tightening Rules on Wall Street

May 21, 2010— -- Nearly two years after the risky behavior of big banks sent the U.S. economy into near-collapse, Congress has passed financial reform legislation said to be the most extensive since the Great Depression.

Against strong Republican opposition, the Senate passed its version of the financial reform bill late Thursday night by a vote of 59 to 39.

Experts say that the majority of regulatory changes needed to prevent a future economic collapse are in the Senate legislation.

Watch "World News with Diane Sawyer" for David Muir's fact check on the new law.

The bill meets the goal of making it "a whole lot less likely that we could have big financial institutions requiring bailouts," said Lawrence White, an economist at New York University who has worked for both Republican and Democratic administrations. "That's the freight train that is now clearly pulling out of the station," he said.

The House passed its version of the reform bill in December 2009, and now legislators will meet in a conference committee to reconcile the two versions.

"It is hard for me to think that this is going to take us more than a month," said U.S. Rep. Barney Frank after he and Sen. Chris Dodd met with President Obama today.

Democrats hope to have a final bill on the president's desk by the Fourth of July holiday.

Over a month ago, Obama urged Congress to pass the reform package.

"If there's one lesson that we've learned, it's that an unfettered market where people take huge risks and expect taxpayers to bail them out when things go sour is simply not acceptable," he said on April 14th.

The version passed by the Senate comes close to meeting the president's goals -- tightening rules on credit and securities markets, boosting requirements for banks' cash reserves, and creating a new watchdog agency to monitor consumer financial products like mortgages.

That agency will watch out for things like hidden fees from credit card companies and risky mortgages handed out by predatory lenders.

"The agency will ask, 'Are consumers being tricked and cheated?'" said White. "It's there that you are going to see the agency take action."