After months of Congressional wrangling and a relentless siege of lobbying by Wall Street banks, the United States Senate finally passed an unprecedented and game-changing package of financial reforms on Thursday.
The reform bill passed by 60-39 margin, with three crucial Republican “aye” votes handing President Barack Obama his first major policy victory since the passage of the healthcare bill earlier this year.
Speaking after the passage of the bill Mr. Obama said, “Congress has now passed a Wall Street reform bill that will bring greater economic security to families and businesses across the country.”
The President touched upon what this meant for the common man, saying, it would bring greater security to people on Main Street including families looking to buy their first home or send their kids to college; to taxpayers who should not have to pay for somebody else’s irresponsibility; to small businesses, community banks and credit unions who played by the rules; and to shareholders and investors who wanted to see their companies grow and thrive.
Giving credit to his colleagues in the Democratic Party, Mr. Obama praised the “tireless efforts” of Senators Chris Dodd and Harry Reid and Representatives Barney Frank and Nancy Pelosi. He said, “I am extraordinarily grateful for their determination in the face of a massive lobbying effort from the financial industry, and I’m also grateful for all of the members of Congress who stood on the side of reform — including three Republican senators who put politics and partisanship aside today to vote for this bill.”
Reform to foster innovation
However, Mr. Obama was quick to dispel any notion of a zero-sum game with negative consequences for banks and other financial institutions, noting that the financial industry was central to the U.S.’s ability to grow, to prosper, to compete and to innovate and that the reform would foster that innovation, not hamper it.
Yet, he said, it was designed “to make sure that everyone follows the same set of rules, so that firms compete on price and quality, not on tricks and traps”. It demanded accountability and responsibility from everybody, he added, arguing that “unless your business model depends on cutting corners or bilking your customers, you have nothing to fear from this reform”.
Touching on some of the key overhaul measures proposed by the bill, Mr. Obama noted that there would be no more taxpayer-funded bailouts and there would be new rules to end the perception that any firm is “too big to fail… so that we don’t have another Lehman Brothers or AIG.”
He further said that complex, backroom deals that had helped trigger the financial crisis in the first place would be brought into the light of day and shareholders and other executives can know that it would be shareholders who had a greater say on the pay of CEOs.
Republicans criticised
After the passage of the bill, both the President and senior Democrats criticised the Republican Party for opposing the reform. President Obama said, “Already, the Republican leader in the House has called for repeal of this reform. I would suggest that America can’t afford to go backwards, and I think that’s how most Americans feel as well.”
Similarly, Senate Majority Leader Harry Reid said, “The ink hasn’t even dried yet on our bill that takes away big banks’ ability to gamble away our jobs, savings and houses, and Republicans already want to give it back.”
In a sharply-worded statement he added that this was the Republican job-killing agenda in full effect and that party wanted to go back to the system that cost 8 million Americans their jobs “because that is what [the Republicans’] friends on Wall Street want, and that’s who they’re looking out for”.
Others however welcomed the reform including Federal Reserve Chairman Ben Bernanke, who said, “The financial reform legislation approved by the Congress today represents a welcome and far-reaching step toward preventing a replay of the recent financial crisis.”
He explained that the reform strengthened the consolidated supervision of systemically important financial institutions, gave the government an important additional tool to safely wind down failing financial firms, created an interagency council to detect and deter emerging threats to the financial system, and enhanced the transparency of the Federal Reserve while preserving the political independence that is crucial to monetary policymaking.
According to a statement by White House Press Secretary Robert Gibbs, the President was hoping to sign the bill as soon as possible, possibly towards the latter half of next week.
