WASHINGTON (CN) - A financial reform bill passed out of the Senate Banking Committee on Monday on a party-line 13-10 vote, setting the stage for what many expect to be a bitter fight in the full Senate over provisions that Committee Chairman Chris Dodd said "will update our regulatory system for the 21st century."
"We must reform our regulatory structure so a crisis on Wall Street doesn't wipe out working families and businesses," Dodd, a Connectictut Democract, told fellow members of the Banking, Housing, and Urban Affairs Committee.
The bill, which will now be considered by the Senate, would impose new rules on Wall Street by handing the Federal Reserve broad new powers to regulate financial firms and crack down on risky lending.
Republicans, who maintain that they want new rules, expressed disappointment with Democrats for pushing ahead on the measure without their support. Republicans have not offered an alternative to Dodd's bill, saying they hope to influence the bill before it is put to a final vote on the Senate floor.
Ranking Republican Richard Shelby of Alabama said Republicans also want to end the idea of "too big to fail" companies and that they want to add consumer protections, but said the bill overcompensates in its consumer protection provisions.
Dodd had said he was prepared for a long debate before taking the vote, but the hearing was short-lived, lasting only half an hour.
The legislation would allow the Fed to extend its reach beyond banks to touch any financial company, writing rules for even small payday lenders. And it would be able to sanction any bank with more than $10 billion in assets for violating rules, as well as any bank-holding company with more than $50 billion in assets.
The bill leaves open the possibility of extending enforcement to other industries, if regulators choose.
The legislation would give the government power to wind down large, shaky financial institutions. Derivatives and other complex financial products would face stricter regulations and transparency requirements, and the government would have more authority to force banks to reduce their risk.
Shareholders would also have more say in how their companies function.
Critics say the new regulations would restrain lending and oppose giving more power to the Fed, which drew popular condemnation for its failure to spot the housing bubble, its handling of interest rates and consumer protections and its role in bailing out large financial firms.
The House passed a financial reform bill in December.
"The stakes are too high and the American people have suffered too greatly for us to fail in this effort," Dodd said. "We will have reform this year."
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