Senate OKs financial-regulation bill

by David Lightman and Kevin G. Hall McClatchy Newspapers May. 21, 2010 12:00 AM

WASHINGTON - The Senate on Thursday night passed the most sweeping changes in government regulation of the nation's financial institutions since the Great Depression, including strong new consumer and investor protections and provisions that seek to shine a bright light on the dark corners of Wall Street.

In a 59-39 vote, four Republicans joined 53 Democrats and two independents in approving the Restoring American Financial Stability Act of 2010. Two Democrats, Washington's Maria Cantwell and Wisconsin's Russ Feingold, as well as 37 Republicans voted no.

Republican Sens. Olympia Snowe and Susan Collins of Maine, as well as Scott Brown of Massachusetts and Charles Grassley of Iowa voted yes. Arizona Republicans Jon Kyl and John McCain voted no.

The House of Representatives
passed a similar version, the Wall Street Reform and Consumer Protection Act of 2009, six months ago. The two bills must now be reconciled in negotiations between the two chambers, passed anew by each and sent to President Barack Obama for his signature, which is expected by July 4.

"Our goal is not to punish the banks, but to protect the larger economy and the American people," Obama said Thursday.

Final passage came after an unusually smooth Senate debate, marred only slightly by Wednesday's failure to limit debate. That proved to be only a small bump in the bill's path, as Brown switched his vote Thursday to give Democrats the 60 votes they needed to move to final passage.

Like its House counterpart, the Senate bill would empower the Federal Reserve as the chief policeman on guard against risks to the broad financial system
.

It also would create an independent entity - called the Bureau of Consumer Financial Protection - to write rules for consumer credit products such as mortgages, student loans and credit cards, aimed at preventing predatory lending and creative loans of the sort that got so many homeowners in trouble.

The final hurdles to passage involved two amendments - one on exempting auto dealers from consumer-protection provisions, as was the case in House legislation. The Senate plans to consider that exemption separately Monday, and it has a lot of support.

"I don't recall in 2008 auto dealers were a significant reason for the economic collapse," said Sen. Ben Nelson, D-Neb.

Obama weighed in with a strongly worded statement saying that exempting the auto dealers would provide a chance for them to "inflate rates, insert hidden fees into the fine print of paperwork, and include expensive add-ons that catch purchasers by surprise."

The dealers, who often are key local voices and sources of campaign contributions, fought back.

"Dealer-assisted financing - which is always optional - regularly affords consumers more favorable terms than those available through other sources," said Ed Tonkin, chairman of the National Automobile Dealers Association.


Senate OKs financial-regulation bill