Senate Passes Financial Regulation Bill

Jul 15 2010 | 4:15pm ET

The U.S. Senate today passed the most sweeping financial regulation overhaul since the Great Depression, imposing strict new rules for banks and requiring hedge funds to register with the Securities and Exchange Commission.

The bill now goes to President Barack Obama, who is expected to sign it into law quickly.

The Dodd-Frank bill, named for its primary sponsors, Sen. Christopher Dodd (D-Conn.) and Rep. Barney Frank (D-Mass.), creates a new regulatory system designed to avoid financial crises like that of 2008. The compromise bill, hammered out between the House of Representatives and Senate over the last several weeks, includes a watered-down version of the so-called Volcker Rule, strictly limiting the amount banks can invest in hedge funds and private equity funds. It also requires such funds—those with more than $150 million in assets, anyway—to register with and disclose more information to the SEC.

The vote was 60 to 38, with three New England Republicans—Sens. Olympia Snowe and Susan Collins of Maine, and Scott Brown of Massachusetts—supporting it and one Democrat, Sen. Russ Feingold of Wisconsin, voting no, calling the bill too soft. Earlier today, the Senate defeated a last-ditch bid by Republicans to filibuster the bill, which they say gives too much power to ineffective government bureaucracy.

“We won’t know the full results of what we have done until the very institutions we have created, the regulations we have suggested and provided for are actually tested,” Dodd said. “We can’t legislate wisdom or passion. We can’t legislate competency. All we can do is create the structures and hope that good people will be appointed who will attract other good people—people who will make careers and listen and see to it that never again do we go through what we have gone through.”

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