Senate passes overhaul of financial regulations

On May 20, the Senate passed the most sweeping overhaul of financial regulations since the Great Depression, according to USA Today. The legislation is a response to Wall Street practices that fueled the housing bubble and recession.

The bill would establish a new consumer watchdog agency to oversee financial products such as mortgages and credit cards; require banks to spin off their derivatives units and bring attention to trading of the obscure instruments; and establish ways to liquidate struggling financial firms without requiring government bailouts.

Most Republicans opposed the bill, saying it burdens small banks and businesses with new rules and fails to end government support for Fannie Mae and Freddie Mac, which supplied much of the funding for mortgages in the housing bubble.

The Senate measure must be reconciled with a similar House bill.

Date : 5/24/2010