House nod to Wall Street bill
US legislators finalised a historic overhaul of financial regulations as dawn broke over Capitol Hill on Friday, handing President Barack Obama a major domestic victory on the eve of a global summit devoted to financial reform.
In a marathon session of more than 21 hours, legislators hammered out a rewrite of Wall Street rules that will crimp the industry’s profits and saddle it with tougher oversight and tighter restrictions.
The reform must still win final approval from both chambers of Congress before Mr Obama can sign it into law, giving Wall Street one final chance to deploy its Army of lobbyists on Capitol Hill. Quick action is expected and it could go to Mr Obama for his signature by July 4.
But the bill has actually gotten tougher in its yearlong journey through the halls of Congress. Democrats rode a wave of public disgust at an industry that awarded itself rich paydays while much of the country struggled through a deep recession caused by its actions.
“We worry about big money. I worry about big money having a corrupting influence, but it is reassuring to know that when public opinion gets engaged, it will win,” said Democratic representative Barney Frank, who headed the panel.
The most sweeping rewrite of financial rules since the 1930s aims to avoid a repeat of the 2007-2009 financial crisis, which touched off the recession and led to taxpayer bailouts of floundering financial giants. Financial institutions would have to pay $19 billion to cover its costs. Democrats raced to complete their work before Mr Obama travelled on Friday to Canada for the Group of 20 meeting of economic powers. Mr Obama will be able to tout the reform as a blueprint for other countries as they try to coordinate their reform efforts. Passage of the bill, now widely expected. will also give Democrats an important legislative victory, alongside healthcare reform, ahead of congressional elections in November.
Legislators munched chocolates to stay awake as regulators and administration officials hovered in the wood-panelled room, and as the night wore on they yielded the microphones to staff to debate the bill’s finer points. The panel completed its work as dawn broke just after 5.30 am, more than 21 hours after it sat down to work. Along the way, they resolved several controversial sticking points that had threatened to scuttle the bill.
They agreed to water down a proposal by Democratic Senator Blanche Lincoln that would have required banks to spin off their lucrative swaps-dealing desks to a separately capitalised affiliate.
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