The US Senate approved a sweeping Wall Street reform bill last night, capping months of wrangling over the biggest overhaul of financial regulation since the 1930s.
By a vote of 59-39, the Senate awarded a victory to President Barack Obama, a champion of tighter rules for banks and capital markets after a 2007-2009 financial crisis that slammed the economy and led to massive taxpayer bailouts.
The Senate bill must now be merged with a measure approved in December by the US House of Representatives. Only then could a final package go to Mr Obama to be signed into law, something that analysts said may happen next month.
Changes proposed in both bills - driven by lawmakers eager to look tough on Wall Street before congressional elections in November - threaten to constrain the banking industry and reduce its profits for years to come.
Flashpoints in the House-Senate negotiations will likely include a controversial proposal to curb bank swap-trading.
Mr Obama said the final version of the bill would hold financial firms accountable but not stifle the free market.
"Over the last year, the financial industry has repeatedly tried to end this reform with hordes of lobbyists and millions of dollars in ads, and when they couldn't kill it they tried to water it down. ... Today, I think it's fair to say these efforts have failed," Mr Obama said.
"We've still go some work to do," he added. "The House and the Senate will have to iron out the differences between the two bills. And there's no doubt that during that time the financial industry and their lobbyists will keep on fighting."
On Wall Street yesterday, the Dow Jones industrial average slid 3.6 per cent, hurt by fears of Europe's debt crisis retarding global economic recovery, but also by uncertainty over US financial reform, traders said.
In the Senate vote, four Republicans sided with the Democrats for approval: Susan Collins, Olympia Snowe, Charles Grassley and Scott Brown. Two Democrats voted against the bill: Maria Cantwell and Russ Feingold.
Democrat Arlen Specter, who lost a re-election primary on Tuesday, did not vote. Nor did Democrat Robert Byrd.
Republicans worked to delay and water down the bill over months of closed-door negotiation and open debate, arguing it was an overreach of government into the private sector.
Reuters