Will the finance bill tame Wall Street?

The Senate's sweeping financial overhaul bill is now on its way to becoming law. But how effective it will be is an open question

Wall Street.
(Image credit: Corbis)

The Senate approved sweeping financial reform legislation Thursday night, putting Democrats on the cusp of a second major legislative victory. (See The Washington Post's summary box for bill highlights) The Senate bill still has to be merged with the broadly similar House version, passed in December. But when the final bill is signed into law by the president, as expected, will it actually work to rein in the Wall Street excesses that fed the current financial crisis? (Watch Rep. Alan Grayson push for a complete Wall Street overhaul)

The bill is better than expected: Amazingly, the Senate bill has "become stronger overall" during the legislative sausage-making, says Brian Beutler in Talking Points Memo. "So toxic are the optics of siding with Wall Street" that senators from both parties embraced several "progressive" provisions that, if they survive to the final bill, should leave "supporters of reform" optimistic.

"Senate passes Wall Street reform bill"

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.


Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

The bill is still too weak: "I recommend lowering your expectations greatly," says Yves Smith in Naked Capitalism. The recent Goldman Sachs "firestorm... stiffened the spines of some senators," but despite "a few wins" for those of us who want "tougher" reform, Wall Street's "dubious business models" — and hefty campaign contributions — will remain "largely intact."

"How financial reform gets done (not)"

Another "government takeover" is the wrong approach: The Democrats' Wall Street fix is "the legislative equivalent of wrongful conviction," says Senate Minority Leader Mitch McConnell (R-KY). Instead of tackling the "root of the crisis," Fannie Mae and Freddie Mac, they'll "expand the cost and size and reach of government" over "anyone in America who engages in a financial transaction." The "arrogance... is astounding."

"This isn't the reform we need"

Continue reading for free

We hope you're enjoying The Week's refreshingly open-minded journalism.

Subscribed to The Week? Register your account with the same email as your subscription.