–Nearly Two-Year Effort Culminates With 60 to 39 Vote
–Senate Sends Bill To President Obama For His Signature
–House Financial Services Chief Frank Comes To Senate Floor For Vote

By John Shaw

WASHINGTON (MNI) – A nearly two-year effort to pass sweeping
financial regulatory reform legislation finally ended successfully
Thursday as the Senate voted to pass the final version of the bill.

The Senate vote was 60 to 39.

Since the House approved the identical bill several weeks ago, the
legislation now goes to President Obama for his signature.

As the final Senate votes were calculated, House Financial Services
Committee Chairman Barney Frank came to the Senate floor to congratulate
Senate Banking Committee Chairman Chris Dodd and other Democratic
leaders.

Earlier in the day, the Senate voted 60 to 38 to end the debate on
the bill.

Then in another procedural vote, the Senate voted 60 to 39 to
waive a budget point of order.

These votes set the stage for final passage of the bill.

The legislation creates a council of regulators to monitor the
economy for systemic threats. It institutes new regulations on
hedge funds and over-the-counter derivatives and creates a Bureau of
Consumer Financial Protection that will oversee mortgage, credit cards
and other credit products.

The bill provides for expanded audits of the Federal Reserve by the
Government Accountability Office — though not of its monetary policy.
The GAO will conduct a one-time audit of all the Fed’s emergency loan
programs that were created during the financial crisis. It will also
have the authority to audit future emergency lending and other Fed
transactions, with a two-year delay in releasing the results.

The bill includes a variation of the so-called Volcker rule,
banning banks from proprietary trading and limiting them from investing
in or sponsoring hedge funds and private equity funds. It limits bank
investments in private equity or hedge funds to 3% of a fund’s capital.
Total investment in private equity and hedge funds can’t exceed 3% of a
company’s tangible common equity.

The legislation pushes most OTC derivatives through third-party
clearinghouses and onto exchanges or electronic trading systems. It
forces banks to push some of their swaps trading into subsidiaries.

Now, after President Obama’s signature, will follow an estimated 18
months of rulemaking by the various regulatory agencies and the new
consumer agency, interpreting the language of the bill.

** Market News International Washington Bureau: 202-371-2121 **

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