The United States House of Representatives gave its final approval on Wednesday to the biggest overhaul of Wall Street rules since the Great Depression of the 1930s, leaving the landmark Bill in the Senate’s hands.
Lawmakers voted 237-192, along party lines, to give regulators an arsenal of new weapons against risky investment practices blamed for the 2007 to 2009 global financial meltdown, and hand President Barack Obama a major political win.
“Today’s [Wednesday] vote is a victory for every American who has been affected by the recklessness and irresponsibility that led to the loss of millions of jobs and trillions in wealth,” Obama said in a statement.
The US Senate planned to take up the measure after the week-long July 4 recess, when Obama’s Democratic allies were expected to lock down the 60 votes needed to ensure passage over any parliamentary delaying tactics.
Amid stubbornly high unemployment near 10% and deep US public anger at Wall Street four months before key November mid-term elections, Obama has led Democrats in painting Republicans as opposed to common-sense reforms.
“It will put in place the strongest consumer financial protections in history, curbing abuses by banks, mortgage and credit card companies and giving their customers the information they need to make responsible financial decisions,” said Obama.
The compromise legislation, finalised by Senate and House of Representative delegates last week after a marathon 20-hour session, marked an important political victory for the Democratic president.
It creates a new consumer financial protection agency, an early warning system to predict and prevent the next crisis, and mechanisms aimed at liquidating rather than saving companies once deemed “too big to fail”.
The legislation also closes loopholes in regulations and requires greater transparency and accountability for hedge funds, mortgage brokers and payday lenders, and arcane financial instruments called derivatives.
It also includes a somewhat diluted version of the so-called “Volcker Rule” — named for former Fed chairperson Paul Volcker — curbing commercial banks’ ability to make speculative investments that are not on behalf of clients.
‘He can’t be that out of touch’
“The party is over,” Democratic House Speaker Nancy Pelosi said shortly before the vote. “No longer will the risky behaviour of the few threaten the financial stability of our families, our businesses and our economy.”
But Representative Eric Cantor, the number two House Republican, denounced what he called “a clear attack on capital formation in America” and charged it only gave more power to “the same regulators who failed to stop” the crisis.
Mindful of the Bill’s political power, Obama led Democrats in hammering House Republican Minority Leader John Boehner for an interview in which he assailed the Bill and described it as “killing an ant with a nuclear weapon”.
“He can’t be that out of touch with the struggles of American families,” Obama scoffed at a rally in Racine, Wisconsin.
“He compared the financial crisis to an ant. This is the same financial crisis that led to the loss of nearly eight million jobs. The same crisis that cost people their homes, their life savings,” Obama said.
Boehner shot back that he “wasn’t minimising the crisis” and charged that the legislation “will actually kill more jobs and make the situation worse”. — AFP