Senate Passes Financial Reform Package
[Update 1: clarifies bill's stance on government ownership of GSEs] The Senate voted late tonight to pass a sweeping rewrite of financial-sector regulations, with 59 votes in favor. Efforts to bring a vote on the text initially failed on Wednesday, before Senators agreed Thursday to wrap up debate on the financial reform package. The 1,500+ page bill, sponsored by Sen Chris Dodd (D-CT), now includes significant amendments to curb the bank and finance industries. Senators previously added amendments that impose leverage and risk-based capital requirements, assign credit-rating agencies to deals, exempt qualifying mortgages from credit risk retention requirements, require lenders to maintain certain underwriting standards and call for a one-time audit of emergency lending actions at the Fed. Opponents argued throughout lengthy debate that the measures will over-regulate the financial industry. Edward Yingling, CEO of the American Bankers Association expressed displeasure at the text's final form. "Many of these negative provisions have nothing to do with the financial crisis," he said in an emailed statement. "Despite all the talk about this being a Wall Street bill, it, in fact, does tremendous harm to traditional banks on Main Street that had nothing to do with the crisis and that will now be less able to support the economy," he added. "This bill promised much-needed reform but has gone terribly wrong." As it stands, the bill will require government ownership of Fannie Mae (FNM) and Freddie Mac (FRE) to end by late next year. Write to Jacob Gaffney. Disclosure: the author holds no relevant investments.