Wall Street bill nearing finish line as Senate passes legislation

President Barack Obama on Thursday moved to the cusp of winning a major overhaul of Wall Street, following the worst financial crisis since the 1930s.

The Senate on Thursday voted 59-39 to support the sprawling 1,500-page bill that now heads to a conference between the House and Senate. Four Republicans joined Democrats in support of the bill. 

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Democratic Sens. Maria Cantwell (Wash.) and Russ Feingold (Wis.) opposed the bill. 

Republican Sens. Scott Brown (Mass.), Susan Collins (Maine), Olympia Snowe (Maine) and Charles Grassley (Iowa) supported the bill. Sens. Arlen Specter (D-Pa.) and Robert Byrd (D-WVa.) were absent.

Democratic lawmakers have vowed to send the bill to the president’s desk for signature before July 4, a little less than two years after the 2008 financial crisis drove the U.S. economy into a deep recession that cost millions of jobs.

“I will be very, very surprised if the president has not signed this before the Fourth of July,” House Financial Services Committee Chairman Barney Frank (D-Mass.) said this week.

The bill emerging from the Senate is tougher in many respects than the legislation the House passed in December, after Obama first proposed a series of regulatory reforms in June 2009.

That’s something of a surprise, since the hard edges of House legislation in the past have been softened by the Senate, where a super-majority of 60 votes is needed for procedural votes.

Fraud charges filed by the Securities and Exchange Commission against Goldman Sachs as the Senate began its debate, however, created a tougher atmosphere for banking lobbyists hoping to win changes to the bill.

“I’m still sort of shocked where we’ve gone,” said Sen. Bob Corker (R-Tenn.), who spent weeks in private negotiations with Senate Banking Committee Chairman Chris Dodd (D-Conn.) in an unsuccessful effort to strike a bipartisan bill.

Recent stock market plunges in the U.S. and abroad have heightened lawmakers’ focus on passing new regulations. The Dow Jones Industrial Average plunged 376 points, or 3.6 percent, on Thursday amid economic troubles in Europe and regulatory questions about high-frequency trading systems.

Among the top issues for Senate and House negotiators to reconcile is a provision in the Senate bill that would require banks to spin off their derivatives trading operations. The provision was first sponsored by Senate Agriculture Committee Chairwoman Blanche Lincoln (D-Ark.), who unveiled tougher legislation on derivatives than many in the financial industry had expected.

 The Lincoln provision has remained in the bill, although it has faced significant resistance from the financial lobby and federal regulators, including Federal Reserve Chairman Ben Bernanke and Federal Deposit Insurance Corporation (FDIC) Chairwoman Sheila Bair.

 Senate Majority Whip Dick Durbin (D-Ill.) also won a major battle to rein in swipe fees paid by merchants to debit card issuers. The “interchange fee” issue has been one of the biggest business battles. The House bill does not include a similar provision.

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Democrats have cast their position during the debate as a fight to rein in Wall Street, and Obama on Thursday declared victory over the lobbyists and special interests he said had tried to kill or water down the bill.

 “I think it’s safe to say these efforts have failed,” Obama said in Rose Garden remarks.

The cloture vote to end debate on Thursday passed 60-40, with three Republicans joining all but two Democrats in favor of ending debate. The Senate had failed Wednesday to end debate on legislation sponsored by Dodd.

Feingold opposed the legislation, arguing this week that it was strong enough.

Brown, Snowe and Collins voted to end debate.

Brown switched his vote in favor of the motion on Thursday, after he received assurances that concerns about home-state insurance and other financial interests would be resolved before the bill is enacted.

 The Senate spent weeks debating and voting on amendments to the bill, but Republicans argued Thursday that the debate should continue instead of moving to a final vote. Senators filed more than 300 amendments to the bill, with the vast majority failing to come up for debate.

Republicans continued to criticize the legislation for its silence on future regulations of Fannie Mae and Freddie Mac, the two housing-finance companies bailed out by taxpayers in 2008.

 Republicans also have argued repeatedly against a new consumer protection regulator to oversee products, such as home loans and credit cards.

 The House and Senate bills boost oversight of the $600 trillion market for complex financial derivatives, establish a new consumer financial protection regulator and aim to prevent firms from becoming too large and interconnected that their failure would threaten the broader U.S. economy.

 “Much of the conferencing process is already going on among our staff and the White House,” Frank said on Tuesday night. “Chris [Dodd] and I have already begun to think about things.”