House passes sweeping financial reform

A year after Wall Street failures plunged the nation into recession, the House on Friday passed the most ambitious restructuring of financial regulation since the New Deal.

The sprawling legislation gives the government new powers to break up companies that threaten the economy, creates a new agency to oversee consumer banking transactions and shines a light into shadow financial markets that have escaped the oversight of regulators.

The vote was a party-line 223-202. No Republicans voted for the bill; 27 Democrats voted against it.

While a victory for the Obama administration, the legislation dilutes some of the president’s recommendations, carving out exceptions to some of its toughest provision. The burden now shifts to the Senate, which is not expected to act on its version of a regulatory overhaul until early next year.

The legislation would govern the simplest payday loan and the most complicated high-finance trades. In its breadth, the measure seeks to impose restrictions on every house of finance, from two-teller neighborhood thrifts to huge interconnected conglomerates.

Democratic leaders had to fend off a last-minute attempt to kill a proposed consumer agency, a central element of the legislation and one the features pushed by President Barack Obama. The agency would strip consumer protection powers from current banking regulators, and big banks and the U.S. Chamber of Commerce vigorously opposed the idea.

Democrats said the legislation would help address the shortfalls that led to last year’s calamitous financial crisis. Republicans argued that the regulations would overreach and would institutionalize bailouts for the financial industry.