House Passes Financial Reform; on to Senate
The House of Representatives passed 237 to 192 its version of the financial reform package late this evening. The bill is now going into the hands of the Senate for a vote of approval. President Barack Obama said that he would like to see financial reform passed by July 4, in an indication that he will sign. Mortgage finance economists and analysts say that as the bill stands, it will likely not initially impact markets greatly. Market analyst Jim Vogel said in his weekly report for FTN Financial Capital that "the broad outlines of Washington’s parameters on financial institutions have been established, and surprises should be fewer in coming months," he said. Vogel believes that the reaction of bond investors to the passage will be more quantifiable next week. "A number of the last minute changes in direction appeared to come from the inner circles that attempted to maintain the spirit of both the House and Senate versions," Vogel adds. For instance, the bill has little Republican support in the Senate. "This may be a pattern that will continue on other upcoming initiatives, such as the reinvention of the housing finance system." Other market commentators are happy to at least see the system working. Joseph Mason, a professor of finance at Louisiana State University commented that "while I don’t necessarily agree with the three core elements of the bill – resolution authority, systemic risk regulation, and consumer financial protection – I can at least say that they have been sufficiently debated to the extent that Congress is reasonably unified around the concepts." Lobby group Americans for Financial Reform, however, wholeheartedly support the action. Director Heather Booth said, "Despite all millions spent and armies of lobbyists deployed to kill this reform, Main Street has come out ahead. Americans for Financial Reform calls on the Senate to do its part and pass this important legislation immediately.” Write to Jacob Gaffney.