Senate Passes Wall Street Reform Bill

The Senate has finally passed it's bill to reform the giant financial corporations on Wall Street. About 1:30 yesterday afternoon, the Democrats were finally able to pass a cloture motion on a 60 to 40 vote. The motion closed off debate on the bill. Three Republicans joined the Democrats in closing the debate -- Scott Brown (Massachusetts), Olympia Snowe (Maine) and Susan Collins (Maine).

Then a few hours later, the Senate voted to pass the reform bill on a 59 to 39 vote. Two Democrats voted against the bill saying it did not go far enough -- Russ Feingold (Wisconsin) and Maria Cantwell (Washington).

I agree with Senators Feingold and Cantwell. Like the health care reform bill before, the Wall Street reform bill does some good things, but could have been much better. I am especially disappointed that the bill did not ban "naked credit default swaps", which allow someone with nothing at stake to bet against our economy (and get rich if the economy fails).

There is still some hope that the bill will be improved when it goes to the House-Senate reconciliation committee, but I doubt that will happen. To be honest, the Senate version is a little better than the House version of the bill. That means the Senate version is probably the best we can hope for. Here is some of what the bill will do:

* creates a new consumer protection agency that can write new rules to protect consumers from unfair or abuse financial practices.

* creates a council of regulators that could keep companies from triggering a new financial crises.

* establishes new procedures for closing down a giant financial corporation that is collapsing.

* it would shine a brighter light on "derivatives" by forcing them to go through a clearinghouse that will more accurately determine their true value.

* prevents commercial banks from owning hedge funds, trading on their own accounts or trading derivatives. A bank would have to establish an independent entity to do any trading.