WASHINGTON (CN) – President Obama signed the Wall Street reform bill into law on Wednesday, making official a sweeping overhaul of the nation’s financial industry. “These reforms represent the strongest consumer protections in history,” he told a gathering of 400 lawmakers, business leaders, consumer advocates, state and local officials, and press.
“The American people will never again be asked to foot the bill for Wall Street’s mistakes,” Obama said to a standing ovation. “There will be no more taxpayer-funded bailouts. Period.”
The legislation, officially called the Dodd-Frank Wall Street Reform and Consumer Protection Act, creates a new consumer protection bureau, housed in the Federal Reserve, which will issue new regulations for banks, mortgage companies, payday lenders and credit card lenders.
The new rules will limit credit card fees, end “unfair rate hikes,” clarify rules on student loans, eliminate hidden penalties and fees in mortgage agreements, and give shareholders a say in executive pay, among other reforms.
Under the new law, consumers who are denied a loan, apartment or job due to bad credit will automatically receive a copy of their credit score.
The bill introduces new regulations to the over-the-counter derivatives market, which Democrats repeatedly referred to as “the shadow economy” during the bill-writing process. Trading in derivatives, or financial instruments that derive their value from underlying investments, contributed to the 2007 financial collapse.
The bill also gives the government the ability to wind down large financial firms that pose a threat to the economy by breaking up and seizing their assets. Obama said this new government capability would ensure an end to taxpayer bailouts of the financial industry and the era of “too big to fail” — “so we don’t have another AIG,” Obama said.
“For these new rules to be effective, regulators will have to be vigilant,” Obama said. Treasury Secretary Timothy Geithner nodded vigorously on the stage behind him.
During his address, Obama specifically thanked Rep. Barney Frank, D-Mass., and Sen. Chris Dodd, D-Conn., for working “day and night” on the bill.
“We had to overcome the furious lobbying of an array of powerful interest groups, and a partisan minority determined to block change,” Obama said.
Obama also drew special attention to the three Republican senators who “put partisanship aside” and voted for the bill, pointing them out in the audience and applauding them.
The bill’s passage in the Senate hinged on the support of Massachusetts Republican Sen. Scott Brown, who had expressed support for the bill and then withdrew his support because he opposed a proposed $19 billion tax on big banks included late in the bill-writing process. Brown again announced his support for the bill after a committee removed the bank tax.
The other two Senate Republicans voting in favor of the bill were Sens. Susan Collins and Olympia Snowe of Maine.
Obama told members of the financial industry, “Unless your business model depends on cutting corners or bilking your customers, you have nothing to fear from this reform.”
Citigroup CEO Vikram Pandit, Barclays PLC President Bob Diamond and Bank of New York Mellon President Gerald Hassell were expected to be in attendance.
“In the end, our financial system only works — our markets are only free — when there are clear rules and basic safeguards that prevent abuse, that check excess, that ensure that it is more profitable to play by the rules than to game the system,” Obama said.
After his remarks, Obama sat at a wooden desk, surrounded by Vice President Joe Biden, Geithner, Dodd, Frank, House Speaker Nancy Pelosi, D-Calif., Senate Majority Leader Harry Reid, D-Nev., and others, and signed the bill.
“It’s done,” he said, putting down the pen.
The Senate passed the bill on July 15 by a vote of 60-39, and the House of Representatives passed it with a 237-192 vote on June 30.