The Senate approved new far-reaching financial rules on Thursday aimed at preventing the risky behavior and regulatory failures that brought the economy to the brink of collapse two years ago and cost millions of Americans their jobs and savings.
Sen. Blanche Lincoln (D-Ark.), chairman of the Senate agriculture committee, proposed dramatic restrictions on trading in derivatives, including a provision that could force big banks to spin off the lucrative business altogether. Her language was added to Dodd's bill and endured, despite efforts by the administration, regulators, lobbyists and Dodd himself to temper it.
Two controversial amendments that had yet to get a vote during three weeks of Senate debate would exempt auto dealers from oversight by the new consumer financial protection bureau, and a second measure pushed by Sens. Carl M. Levin (D-Mich.) and Jeff Merkley (D-Ore.) would ban banks from making speculative investments using their own capital, known as proprietary trading, and from owning hedge funds or private-equity funds.
GOP members railed about the fact that Dodd's bill would not address the problems at government-backed mortgage giants Fannie Mae and Freddie Mac. Other issues remained unresolved heading into the conference process, such as Lincoln's derivatives provision. Frank said he expects to abandon a House provision that would require the financial industry to pay into a fund that could be used to liquidate failing firms, an issue that became a political lightning rod in the Senate. And he said he expects the Senate to back off its proposal to house an independent consumer protection agency within the Federal Reserve, a plan Frank called "a mistake," saying it would a level of responsibility that the Fed would not have.
http://www.washingtonpost.com/wp-dyn/content/article/2010/05/20/AR2010052003503.html
