2010-07-01 10:32

WASHINGTON - The US House of Representatives Wednesday approved a historic overhaul of financial regulations, bringing Congress closer to passing it before July 4.

The landmark bill, which was voted at 237-192, now is left for the Senate. The Senate was expected to take up the measure after the week-long Independence Day recess. If the bill passes the Senate, it will be sent to President Obama to sign into law.

"The party is over, no longer again will recklessness on Wall Street cause joblessness on Main Street," Democratic House Speaker Nancy Pelosi said shortly before the vote.

"No longer will the risky behavior of the few threaten the financial stability of our families, our businesses and our economy as a whole," she said.

President Barack Obama on Wednesday welcomed the House of Representatives' approval of the bill, saying it was a victory in the fight against irresponsibility on Wall Street.

"It will make our financial system more transparent, so that complex transactions that escaped scrutiny in the past will now be done in the light of day," he said in a statement.

He said earlier Wednesday that the financial reform "will protect our economy from the recklessness and irresponsibility of a few." It will protect consumers against the unfair practices of credit card companies and mortgage lenders and ensures taxpayers are never again on the hook for Wall Street's mistakes.

The over 2,000 pages legislation, the most ambitious rewrite of financial regulations since the Great Depression in 1930s, aims to curb Wall Street's high-risk practices blamed for the global economic meltdown of 2008, solve the systemic risk of the "too big to fail" problem among financial firms, and create a consumer protection agency to better protect Americans.

According to the mammoth legislative package agreed by the lawmakers, big banks should divest certain derivatives units, such as those trading credit-default swaps, into separately capitalized affiliates.

The consumer protection agency would supervise and regulate mortgage and credit-card products, including payday lenders and check cashiers.

The Obama administration launched its financial regulatory reform proposal in June 2009. The House passed its version of the bill last December. The new bill on Wednesday combines the House bill with one passed by the Senate last month.

Democratic lawmakers hailed the bill a historic victory.

"Never again, never again should Wall Street greed bring such suffering to our country," declared House Majority Leader Steny Hoyer.

However, Republicans portrayed the bill as a vast overreach of government power that would do little to prevent future bailouts of failing financial institutions.

This legislation "purports to prevent the next financial crisis", said Rep. Eric Cantor, the second-ranking Republican leader in the House, "but it does so by vastly expanding the power of the same regulators who failed to stop the last one."

Many economists believe that the legislation will help reduce risks of the financial system, but it can not prevent future crisis completely.