The most sweeping financial regulatory reforms in decades are nearing fruition following a 59-39 vote in the Senate Thursday. Paving the way for the Senate to reconcile its version of a Wall Street makeover with the House's version, the vote came after some four weeks of debate and consideration of close to 60 amendments.
Republican leadership in the debate say the bill does not go far enough, noting specifically the absence of government-sponsored enterprise (GSE) reform. Sen. Richard Shelby, the ranking Republican on the Senate Banking Committee, called the failure to address the GSEs the legislation's ‘most glaring omission.’
‘It is simply a failure of will that nothing is being done to reform the GSEs or, at the very least, cap the allowable losses,’ Shelby said in a closing statement Thursday.
The process now turns to conference sessions between the House and the Senate. In a statement Thursday, Rep. Barney Frank, the chairman of the House Financial Services Committee who steered that chamber's legislation through passage in December, said the two bills are ‘very similar.’
‘[T]he House is ready to go to conference to work out the remaining issues,’ he said.
One such remaining issue is how best to liquidate large, systemically important firms. The House bill uses a pre-funded approach that would require the industry to pay for a $150 billion fund. The Senate scrapped that idea after Republicans used it to accuse Democrats of institutionalizing bailouts. The revised Senate solution calls on the government to seize such large failing companies and then recoup losses from the industry after the fact.
Treasury Secretary Tim Geithner hailed the Senate bill passage, saying the House and the Senate have now each passed ‘strong bills that protect consumers, limit risk-taking by large institutions, and addresses the problem of 'too big to fail.'’