Lawmakers Pull All-Nighter to Reach Wall Street Reform Deal

June 25, 2010

(ChattahBox)—After a 20-hour all nighter, lawmakers from the House and the Senate struck a deal for a reconciled Wall Street reform bill. The final bill was weakened in some areas and toughened in others, but in the final analysis, the package of financial regulatory reforms, now called the Dodd-Frank bill tracks the original Senate bill. President Obama hailed the measure as having the “toughest” consumer reforms in history. “Credit card companies will no longer be able to mislead you,” added the President. Rep. Barney Frank (D-MA), Chairman of the powerful Financial Services Committee was pleased with the curbs on Wall Street abuse. “This is going to be a very strong bill, and stronger than almost everybody predicted that it could be and that I, frankly, thought it would be,” he said. And Sen. Chris Dodd (D-CT), Chairman of the Senate Banking Committee, called the new regulations in the bill, “huge accomplishments.” The final bill still needs to be passed by a vote of the House and Senate. And Republicans are expected to filibuster the bill in the Senate, because that’s what they do, but senior lawmakers expect the bill to pass and be on President Obama’s desk by July 4.

Bloomberg has a full rundown of the provisions of the bill, noting that Sen. Blanch Linoln’s (D-AR) derivatives proposal survived, but was pared down. Still, the derivatives measure regulates the wild “$615 trillion over-the- counter derivatives market” for the first time:

“Lawmakers from the House and Senate worked through the night in a 20-hour session to reach deals on a ban on proprietary trading by banks and oversight of the derivatives market. This month, they’ve also agreed on measures to wind down big firms whose collapse might shake markets, to keep tabs on hedge funds and to make it easier for investors to sue credit rating companies.”

And a version of the so-called Volcker Rule also survived the intense sausage grinding process that resulted in one of the most sweeping overhauls of our nation’s financial system in decades:

“At two minutes before midnight Thursday, some 14 1/2 hours after they began work Thursday morning, members of the House-Senate conference committee approved a final revision of the measure known popularly as the Volcker Rule.”

“The rule, named for Paul A. Volcker, the former Federal Reserve chairman who proposed the measure this year, restricts the ability of banks whose deposits are federally insured from trading for their own benefit. That measure had been fiercely opposed by banks and large Wall Street firms, who viewed it as a major incursion on some of their most profitable activities….”

Wall Street managed to extract a concession on the regulation of credit rating agencies, making it harder for firms to shop for the best rating, but the bill still places oversight on the agencies:

“That doesn’t mean Wall Street walked away without anything to show for the fight. In the previous days, for instance, it succeeded in gutting an amendment meant to eliminate conflicts of interest at credit rating agencies. That measure would have prevented big firms from shopping around between agencies in search of the best rating. Now it will first be subject to a two year review before implementation and could be scrapped altogether. Similarly, industry won a number of exemptions from new consumer protection and trading regulations.”

The bill isn’t perfect, but President Obama was pleased with the outcome, saying it contained about 90 percent of what he wanted. And although Wall Street lobbyists successfully influenced some measures, at the end of the day the financial industry will now have some real oversight. The Wall Street Journal characterized the final bill, as the government placing a “tougher leash” on Wall Street.

All in all, this bill is a crowning success for President Omama, the Democrats and for consumers.


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