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US House passes historic Wall Street reform bill

In a major victory for President Barack Obama, the US House of Representatives passed a package of sweeping reforms to the financial regulatory system to avoid another economic crisis.

world Updated: Jul 01, 2010 13:29 IST

In a major victory for President Barack Obama, the US House of Representatives passed a package of sweeping reforms to the financial regulatory system to avoid another economic crisis.

The 237-192 House vote on Wednesday moved the bill a step closer to the finish line, but the Senate isn't likely to take up the measure until the week of July 12. And it's not clear whether Democrats have secured the votes they need to beat a Republican filibuster.

After more than 18 months of negotiation and debate, the bill aims to strengthen consumer protection, shine a light on complex financial products and establish a new process for shutting down giant financial firms in trouble.

"Today's House vote in favour of Wall Street Reform puts us on the cusp of passing a law that will give consumers greater protection and safeguard our economy against future financial crises," said Obama.

"It has been a long fight against the defenders of the status quo on Wall Street, but today's vote is a victory for every American who has been affected by the recklessness and irresponsibility that led to the loss of millions of jobs and trillions in wealth," he said.

"We will pass the toughest set of Wall Street reforms in generations," said Democratic House Speaker Nancy Pelosi. "It reflects transparency and accountability...and this legislation makes common sense reforms that end the error of taxpayer bailouts."

House Republicans voted overwhelmingly against the bill, saying it would usher in an era of too much government regulation, and stymie job growth and credit availability.

"This is the financial equivalent of Obamacare," said Republican Spencer Bachus referring to the health care reform measure passed earlier this year.

Democrats won't make their self-imposed deadline of passing the bill by July 4, due to a delay in finding a different way to pay the $19 billion tab for the measure.

On Tuesday, Democratic leaders agreed to pay for the bill by hiking the premiums big banks pay for insurance on commercial deposits and ending the Troubled Asset Relief Programme (TARP) - which aided failing banks, insurers and auto firms - a few months early.

That plan replaced what was already in the bill - assessing big banks and hedge funds - because key moderate Senate Republicans didn't like the idea of passing a new "tax".

Senate Democrats need a few moderate Republicans to get the 60 votes needed to end any filibuster against the measure.