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US Senate passes sweeping financial reforms Bill

By Lalit K Jha
July 16, 2010 13:41 IST
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The US Senate passed the Wall Street Reform Bill that will make financial institutions more accountable and make them pay for any repeat of a 2008-like credit crisis by liquidating their assets.

President Barack Obama is expected to sign the bill, passed by the Senate by a 60-39 vote yesterday, into a law next week. The House of Representatives had already passed the bill earlier this week.

The law will check taxpayers' money from being used to pay for the financial mismanagement of institutions.

The bailout of failed banks in the aftermath of the 2008 crisis was estimated to exceed over USD one trillion.

"It (legislation) strengthens the consolidated supervision of systemically important financial institutions, gives the government an important additional tool to safely wind down failing financial firms, creates an inter-agency council to detect and deter emerging threats to the financial system...," said Ben S Bernanke, Chairman of the Board of Governors of the Federal Reserve System.

Terming the Bill as "strongest protection to the consumers and taxpayers they have ever had", Senate majority leader Harry Reid said: "We are giving Wall Street the strongest oversight it's ever had - not to stifle it, but to safeguard us. We are taking the shady markets that operate in the darkness and bringing them out into the daylight."

Senator Bernie Sanders, in a statement, called the overall legislation a "positive step forward" but said much more was to be done to end the greed and recklessness by the Wall Street financiers responsible for the worst economic collapse since the 1930s.

The senator faulted the legislation for not breaking up banks deemed "too big to fail".

Incredibly, three of the four biggest banks in the country are larger today than they were before taxpayers bailed them out. Sanders also wanted the bill to impose a cap on runaway credit card interest rates.

Senators rejected an even more modest proposal to let states enforce their own local laws.

Among others, the provision requires extractive companies listed on US stock exchanges to disclose, in their SEC filings, payments made to governments for oil, gas and mining.

"This provision is a critical part of the increased transparency and corporate responsibility that we are striving to achieve in the financial industry. Given the catastrophic events in the Gulf of Mexico, oil companies, in particular, should well understand that secrecy fosters instability, corruption and greater risk," said Senator Cardin, Chairman of the US-Helsinki Commission and a member of the Senate Foreign Relations Committee.

"The Cardin-Lugar amendment brings a major step in favour of increased transparency at home and abroad. It empowers investors to have a more complete view of the value of their holdings. It brings more information to global commodity markets, which would benefit price stability.

"Most importantly, it helps empower citizens to hold their governments to account for the decisions made by their governments in the management of valuable oil, gas, and mineral resources and revenues," said Senate foreign relations committee ranking member Lugar in a floor statement.

"The extractive industries transparency provision is another major step forward for protecting US taxpayers and shareholders and increasing the transparency of major financial transactions," said Senate Judiciary Committee Chairman Patrick Leahy.

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Lalit K Jha in Washington
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