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Bank legislation passes House

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Nearly two years after Wall Street collapsed and left the country’s economy staggering, the House of Representatives passed a massive overhaul of the financial industry that would extend the government’s reach from store-front thrifts to the executive suites of Manhattan.

The Senate was forced to delay its vote on the Restoring American Financial Stability Act of 2010 bill until the middle of this month, as Democrats struggle to secure the votes of a few Republican senators, even after meeting their demands and backing down on a $19 billion tax on big banks and hedge funds.

The legislation, which is more than 2,000 pages, would rewrite the nation’s regulatory laws; simple supermarket purchases and exotic derivatives trades would be subject to new regulations. The entire financial system would be placed on a risk watch in hopes of averting another catastrophic financial crisis.

President Barack Obama hailed the vote as “a victory for every American who has been affected by the recklessness and irresponsibility that led to the loss of millions of jobs and trillions in wealth.”

The 237-192 House tally generally broke down along party lines, but attracted more support than another similar bill proposed in December. At that time, no Republicans voted for the House version of the bill. The new legislation combines the House bill with one passed by the Senate last month.

“Today, I rise with the  clear message that the party is over,” House Speaker Nancy Pelosi declared. “No longer again will recklessness on Wall Street cause joblessness on Main Street. No longer will the risky behavior of a few threaten the financial responsibility of our families, our businesses, and our economy as a whole.”

Republicans portrayed the bill as a huge overreach of government power that would do little to prevent future bailouts of failing financial institutions. They complained that it failed to place tighter restrictions on Fannie Mae and Freddie Mac, the mortgage giants forced into large federal bailouts, after their questionable lending helped trigger the housing and economic crisis.

“This legislation is a clear attack on capital formation in America,” commented Rep. Eric Cantor of Virginia, the second-ranking House Republican. “It purports to prevent the next financial crisis, but it does so by vastly expanding the power of some regulators, who failed to stop the last one.”

Only three Republicans voted for the financial reform bill: Joseph Cao of Louisiana, Mike Castle of Delaware, and Walter Jones of North Carolina. Nineteen Democrats voted against it, eight fewer than in December.

As consistent as the House vote was, the Senate was a study in unpredictability. House and Senate negotiators were forced to reconvene to remove a $19 billion tax on large banks  and hedge funds, hoping to overcome objections from Senators Scott Brown, Susan Collins, and Olympia Snowe–Republicans who voted for the senate version.

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