By Denny Gulino

WASHINGTON (MNI) – The long march of financial industry reform has
just begun with the Senate’s final passage of the sweeping package, and
U.S. regulators — whom even the Fed’s vice-chair-to-be said dropped the
ball — are ready to shoulder the “burden of responsibility,” Treasury
Secretary Tim Geithner said Thursday afternoon.

Choosing to showcase his celebratory comments by facing TV cameras
outside a Department gate, Geithner said now that the domestic rules
have changed the U.S. the rest of the G20 countries will be settling on
an international regulatory reform framework by November.

The Senate earlier in the afternoon passed 60 to 39 the compromise
version of the legislation worked out with the House, sending it to
President Obama for his signature in the coming days.

An estimated 18 months of rulemaking by the various regulatory
agencies will be getting under way, setting the new mandates for banks
and other financial institutions.

“These reforms place an enormous burden of responsibility on the
shoulders of those who lead our financial regulatory agencies,” Geithner
said. “They recognize that responsibility.”

Earlier in the day San Francisco Federal Reserve Bank President
Janet Yellen gave a congressional committee her assessment of how her
own Fed and other regulatory agencies did leading up to the crisis.

“We saw a number of different things and we failed to connect the
dots,” Yellen told the Senate Banking Committee in her confirmation
hearing. “While we thought about the risk coming from a housing price
decline, I think we failed to understand just how seriously mortgage
underwriting standards had declined.”

Answering questions, Geithner said “there is no risk” the
legislation will harm the competitiveness of U.S. banks and that the
rest of the G20 will adopt their own reforms, negotiated by November.

“These reforms,” Geithner said, “will allow the government to make
sure that those risks do not threaten the health of the economy as a
whole.”

The banking industry’s voice in Washington, the American Bankers
Association, said Thursday the legislation is “overloaded with new rules
and restrictions” with the result of “years of uncertainty as to what
the massive new rules will mean.”

Late in the afternoon President Obama added his own praise of the
legislation, saying that it will ensure all financial system players are
guided by the same rules. If they manage themselves well, “they will
have nothing to fear.”

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

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