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The Senate, last night, approved a bill that includes some of the most sweeping changes to the financial services industry since the Great Depression. The measure is designed to take on problems that pushed the industry to the brink of collapse nearly two years ago.
NPR's Audie Cornish reports.
AUDIE CORNISH: The Senate legislation spans 1,400 pages and touches on a dozen different sectors of the financial industry. But Banking Committee Chairman Chris Dodd said the main focus was restoring public confidence.
Senator CHRIS DODD (Democrat, Connecticut; Chair, Banking Committee): We never, ever, ever again want to see you want to go through this because your government failed to establish the rules, the regulations and the safeguards that ought to protect you against those kind of behaviors that brought us to this point.
CORNISH: Contributors to the crisis, like predatory mortgages, are dealt with through a proposed Consumer Financial Protection Bureau to police personal lending. The derivatives market, where financial firms bundled and sliced and bet on mortgage products, would be brought onto a formal trade system with clearing requirements to ensure those involved could cover their bets.
And instead of bailing out financial firms considered too big to fail, the bill seeks to establish a process for companies to be dissolved by banking regulators. But to most Republicans, these are the same provisions where the bill went wrong. Arizona Senator Jon Kyl.
Senator JON KYL (Republican, Arizona): I hoped the bill would be amended to actually end taxpayer-financed bailouts and the concept that companies can be too big to fail, but that didn't happen. And so we're left with a bill that enshrines into law failed policies of the past, imposes a massive new bureaucracy on small business that had nothing to do with creating the crisis and threatens jobs and our economic growth.
CORNISH: GOP lawmakers argued that loopholes in the legislation could allow dying firms to survive like zombies on the taxpayer's dime, and they criticized the consumer bureau concept for regulating many more kinds of credit than the mortgages that got people into trouble. And some liberal Democrats were unhappy, too.
Senator TOM HARKIN (Democrat, Iowa): Wall Street got by pretty darn good in this bill.
CORNISH: Iowa Democrat Tom Harkin was among the many lawmakers who sought to make the bill tougher, but never even got their amendments to the floor.
Sen. HARKIN: Like I said, it's better than what we've got now, but not by a heck of a lot.
CORNISH: Harkin wanted to cap banking fees at ATM machines. Other lawmakers sought to cap the size of banks altogether, and many wanted to bolster the bill's provisions restricting commercial banks from getting involved in risky trading.
Next, House and Senate lawmakers will hash out the major differences between their bills in a conference. But Republicans, like New Hampshire's Judd Gregg, were less than optimistic that some of the more controversial provisions of the bill would change.
Senator JUDD GREGG (Republican, New Hampshire): One can always hope that a conference will improve things, but that's sort of a check-in-the-mail type of situation.
CORNISH: And it could take another four weeks to hash it all out.
Audie Cornish, NPR News, the Capitol.
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