U.S. Senate passes Wall Street Reform and Consumer Protection Act

By a vote of fifty nine to thirty nine, the United States Senate this evening passed the Wall Street Reform and Consumer Protection Act of 2009, which is supposed to make financial markets slightly less rigged and crooked.

The Senate version's major provisions call for:

• the establishment of a consumer protection division within the Federal Reserve (the opaque, notoriously secretive private government that controls U.S. monetary policy) which will be tasked with setting and enforcing new regulations to stop predatory lending practices,
• the formation of a council of "systemic risk" regulators that will serve as a watchdog against threats to the stability of the nation's financial system,
• an audit of the Federal Reserve, conducted by the GAO, or Government Accountability Office (something many progressives and libertarians have passionately lobbied for these past few months),
• tougher rules for derivatives (the sophisticated financial agreements used to hedge risk, generally categorized as swaps, futures, and options) which two key progressive Democratic senators still don't consider to be tough enough (more on that in a moment),
• the ability of the the federal government to seize and liquidate giant "too big to fail" financial institutions deemed to be in danger of doing under, so that American taxpayers don't get stuck with the bill later on.
  

The vote for and agaisnt was bipartisan, with four Republicans voting aye and two Democrats — including our own Maria Cantwell, who had earlier joined a Republican filibuster of the bill — voting no. (The other was Russ Feingold of Wisconsin, who, like Senator Cantwell, believed the bill wasn't strong enough).

Democratic senators Robert Byrd and Arlen Specter did not vote.

The Pacific Northwest's other Democrats — Mark Begich, Patty Murray, Jeff Merkley, Ron Wyden, Max Baucus, and Jon Tester — were all ayes. Republicans Lisa Murkowski, Mike Crapo, and Jim Risch were all nays.

In a statement sent to NPI, Senator Cantwell elaborated on the rationale behind her "no" vote on H.R. 4173, and her opposition to ending debate:

While this bill takes much needed steps to help prevent a crisis of this magnitude from ever happening again, it fails to close the very same loopholes in derivatives trading that led to the biggest economic implosion since the Great Depression.

Throughout this debate I have fought hard against efforts to weaken this legislation as well as to pass language to strengthen it further. But the fact of the matter is, without key reforms in derivatives trading, this bill does not safeguard America’s economy from a repeat of this crisis.

It sets up a process for responding the next time we have a financial crisis, but it doesn’t prevent this kind of thing from ever happening again. We have to stop these kinds of dangerous activities. We need stronger bans on banks gambling with depositors’ money. We need bright lines – like Glass-Steagall – that separate risky activities from the traditional banking system.

We need to refocus our financial system away from synthetic bets and get more capital into the hands of job creators and Main Street businesses. There are good, strong provisions in this bill, and I’m proud of the work we did to get them in there, but I fear that without closing the loopholes primarily responsible for this economic meltdown, we are missing the entire heart of the matter.

Senator Murray, in contrast, was more upbeat about the passage of the legislation, characterizing it as a net win for Washingtonians:

This bill provides Washington families with the strongest consumer protections in our history. It finally adjusts the playing field to put families and their finances before big banks, credit card companies and mortgage lenders. And it guarantees that Washington taxpayers will never be on the hook to bail out Wall Street again.

I have heard from so many people across our state whose stories demonstrate the need for us to act. Families facing foreclosure due to mortgage fraud, seniors who have lost their retirement savings, small businesses that can’t hire because they can’t borrow, and those who have lost everything due to Wall Street’s "anything goes" rules. These families deserve not only accountability, they deserve protection. Standing by and doing nothing is not an option.

H.R. 4173 was previously known as S. 3217 while it was being shaped in committee and before passage. H.R. 4173 is the House's version of the legislation, approved close to half a year ago, which is different from the Senate's.

Lawmakers will now attempt to resolve their differences by appointing a conference committee, which must merge the two versions together. It could take weeks for Congress to agree on a compromise that each chamber can accept.