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2010-07-22 04:48:29
President Barack Obama has signed into law the biggest overhaul of American
financial regulation in decades.
The president said the law will ensure "that everyone follows the same set of
rules, so that firms compete on price and quality, not tricks and traps".
The law is a major victory for Mr Obama and the Democrats, who passed it with
little Republican support after months of political wrangling.
It was vehemently opposed by the financial services industry.
Big Banking
The law tightens mortgage and consumer lending rules, improves disclosure for
student borrowers and average investors and establishes a new consumer
protection agency, among other provisions.
Almost every Congressional Republican opposed the bill, saying its new
regulations would prove burdensome to businesses trying to create jobs.
The bill "fails to address the root causes of the kind of crisis it's meant to
prevent", Senate Republican leader Mitch McConnell said last week.
"This is a bill that creates a vast new and unaccountable bureaucracy that, if
past experience is any guide, will lead to countless burdensome, unintended
consequences for individuals and small businesses, that will constrict credit
and stifle growth in the middle of the worst economic period in memory."
Analysis
Andrew Walker Economics correspondent, BBC News
Several provisions are intended to eliminate government bailouts by dealing
with an issue known as "too big to fail", where a financial firm cannot be
allowed to collapse because of the wider damage it would do.
There are provisions to enable regulators to shut down a failing large firm in
an orderly manner and others intended to curtail their size in the first place.
These and other measures probably do reduce the risks of bailouts being needed,
but in the end, future governments will most likely come to the rescue if the
danger to the wider economy seems great.
For critics, the big omission is the two housing finance companies, known as
Fannie Mae and Freddie Mac, which were rescued by the government and which had
some role in the crisis. The administration plans to reform them later.
But Mr Obama described the bill as a necessary measure to prevent future
economic disaster, saying world's current economic troubles were caused in
large part by "a breakdown in our financial system" and "a failure of
responsibility from certain corners of Wall Street to the halls of power in
Washington".
"Our financial system only works - our markets are only free - when there are
clear rules and basic safeguards that prevent abuse, that check excess, that
ensure that it is more profitable to play by the rules than to game the
system," Mr Obama said at the White House.
In a note of irony, Obama signed the bill with great fanfare in the massive
Ronald Reagan Building, named after a president who championed deregulation.
To a burst of applause, the president said: "Because of this law, the American
people will never again be asked to foot the bill for Wall Street's mistakes."