WASHINGTON -- Prodded by national anger at Wall Street, the Senate cleared the way Thursday for the most far-reaching new restraints on big banks since the Great Depression. President Barack Obama cheered from the White House.
Breaking a Senate blockade by a single vote, lawmakers voted 60-40 to end debate and advance the massive financial regulation bill, which has become a priority for Obama after the passage of his health care overhaul in March.
Obama said the financial industry had tried to stop the new regulations "with hordes of lobbyists and millions of dollars in ads."
Noting the near-meltdown of big Wall Street investment banks and the resulting costly bailouts, he said, "Our goal is not to punish the banks but to protect the larger economy and the American people from the kind of upheavals that we've seen in the past few years."
The legislation calls for new ways to watch for risks in the financial system and makes it easier to liquidate large failing financial firms. It also writes new rules for complex securities blamed for helping precipitate the 2008 economic crisis, and it creates a new consumer protection agency.
"We'll soon have in place the strongest consumer protections in history," Obama declaring, covering credit cards, student loans, mortgages and more.
Two amendments stood between the bill and final Senate passage. One would ban commercial banks from carrying out speculative trades with their own money. The other would exempt auto dealers from oversight by a new consumer protection bureau.
Those proposals were to be combined, but support for each came from a different faction in the Senate, with some overlap. That meant that senators who wanted to exclude car dealers from the rules of a consumer protection bureau, mostly Republicans, would have to accept the bank trading limits, a Democratic proposal.
The Obama administration expressed support for the trading restriction but said it would accept its demise if that meant killing the auto dealer measure it opposes.
Three Republicans -- Scott Brown of Massachusetts and Olympia Snowe and Susan Collins of Maine -- voted to end debate and move ahead on the bill. Two Democrats -- Russ Feingold of Wisconsin and Maria Cantwell of Washington -- voted with other Republicans against it.
Democrats succeeded in breaking through the Republican block by winning Brown's backing. The Massachusetts Republican, who had voted against ending debate on Wednesday, met with Reid on Thursday morning to voice his concerns regarding the bill's effect on Massachusetts banks such as State Street and insurance firms such as MassMutual. House Financial Services Committee chairman Barney Frank, also of Massachusetts, weighed in Thursday with letters to Reid offering his own guarantees that the final bill would resolve Brown's concerns.
Cantwell and Feingold continued to object to the bill. Cantwell protested her inability to get a vote on an amendment that she said would toughen regulation of complex securities known as derivatives. Feingold has said the bill does not go far enough to restrain Wall Street.