July 15, 2010 -- President Obama today applauded the Senate for passing a sweeping overhaul of Wall Street regulations, and said he looks forward to signing it next week.
"Because of this reform, the American people will never again be asked to foot the bill for Wall Street's mistakes," said Mr. Obama in remarks at the White House late Thursday afternoon. "There will be no more taxpayer-funded bailouts – period."
The bill,which includes the most far-reaching changes in the way Wall Street operates since the Great Depression passed the Senate by a vote of 60 to 39.
There is evidence that Wall Street has lost many of its fears of the bill during the months of negotiations that led to its final form.
Despite some industry sentiment that regulatory reform would cramp Wall Street's ability to thrive, executive recruiters were reporting that investment bankers and traders are back in demand. Hedge funds are getting more margin as banks loosen lending standards, a Fed survey showed. And the Wall Street Journal reported today that the world's banks appear to be winning a reprieve from tough new capital requirements.
Victory for Democrats
The bill's passage is a giant victory for Democrats in the White House and Congress. Now that the legislation has cleared the Senate, Congress has passed three major pieces of legislation – including health care reform and the economic stimulus package – in President Obama's first 18 months in office.
Three Republicans today crossed party lines to support the financial overhaul, with Massachusetts Sen. Scott Brown and Maine Sens. Susan Collins and Olympia Snowe all backing the measure. Every Democrat except for Wisconsin Sen. Russ Feingold voted for the bill.
In a statement, Feingold said, "I made clear that my test for this bill would be whether it prevents another economic crisis. Unfortunately, this bill falls short. The reckless practices of Wall Street sent our economy reeling, triggered the worst recession since the Great Depression, and left millions of Americans to foot the bill. Despite these cataclysmic events, 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."
The sweeping reform bill will create a consumer financial protection agency, let the government dismantle large failing firms, bring transparency to the murky derivatives market, and cap the fees that debit card companies can charge retailers.
But Republican critics have argued that the bill will only give the same government regulators who failed in the build-up to the crisis even more power. Rather than improving the financial system and protecting taxpayers they contend, the reform will only harm the industry, stifle economic growth and lead to future bailouts.
"The bill does very little to make our financial system safer," Alabama Republican Richard Shelby, the ranking member on the Banking Committee, said on the Senate floor today.
"The White House will call this a victory," said Senate Minority Leader Mitch McConnell, "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."
Top Senate Democrats today attempted to do just that.
"I can't legislate integrity, I can't legislate wisdom, I can't legislate passion or competency," said the banking panel's chairman and the bill's co-author Chris Dodd of Connecticut. "What we can do is create the tools and the architecture to allow good people to do a good job on the behalf of the American public."
"I regret that it can't give you your job back, restore that foreclosed home, or put retirement money back in your account," he continued, "but what I can do is see to it that we never ever again have to go through what this nation has been through and that's what this effort has been about over the last several years."
Senate Majority Leader Reid highlighted that Democrats have managed to overcome the army of lobbyists that Wall Street spent millions of dollars to deploy to fight the bill inside the Beltway.
"Wall Street doesn't like the bill," Reid said. "Why would they? Why would they want us to change the system they rigged?"
"This," he said, "is about our ability to trust our financial system."
Democrats today accused Republicans of siding with Wall Street, rather than Main Street.
"This is very simply today a vote on one side, big banks with big bonuses. On the other side, the American people," said Sen. Debbie Stabenow of Michigan, "and the American people won and we're very very proud of that."
"You're either voting for the American people ... or you're voting for entrenched financial interests," said Democrat Jack Reed of Rhode Island.
However, some of the leading voices on economic and financial issues have said that the 2300-page bill does not go nearly far enough in cracking down on the ways of Wall Street.
Simon Johnson, a former chief economist for the International Monetary Fund, recently blasted the Obama administration for "punting" on the bill.
"This administration and this Congress had ample opportunity to confront this problem and at least wrestle hard with it," Johnson said in a blog post. "Some senators and representatives worked long and hard on precisely this issue. But the White House punted, repeatedly, and elected instead for a veneer of superficial tweaking. Welcome to the next global credit cycle – with too big to fail banks at center stage."
Moreover, an ABC News/Washington Post poll released earlier this week found that just 44 percent approve of the President's work on Wall Street reforms.