House Backs Financial Regulation Reform

Jul 1 2010 | 11:50am ET

The House of Representatives yesterday gave its final approval to the most sweeping overhaul of U.S. financial regulations since the Great Depression.

The bill includes strict new rules for banks—including a ban on proprietary trading and a consumer financial protection agency, but lets hedge funds off relatively easy—passed by a vote of 237 to 192. Nineteen Democrats opposed the legislation, while three Republicans crossed party lines to vote for it.

The legislation—which was already approved by both houses of Congress but required reconciliation to hammer out differences between the two bills—now moves to the Senate, where a vote is expected later this month.

While the original bill passed the Senate with the support of three Republicans, one of those Republicans, Sen. Scott Brown (R-Mass.) said he was still unsure that he would vote for the bill. Democrats need at least 60 votes to pass procedural requirements to bring the bill to a vote, without Brown and following the death of Sen. Robert Byrd (D-W. Va.) this week, they would have exactly that number.

The final bill includes a much-watered down version of the so-called Volcker rule, which was designed to keep banks from putting too much of their money in hedge funds and private equity funds. Under the version that survived the House-Senate conference, banks will be permitted to invest up to 3% of their capital in alternative investment funds.


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