The US Congress has approved the broadest overhaul of financial rules since the Great Depression and sent it to President Obama to sign into law.
By a vote of 60 to 39, the Senate passed a sweeping measure that tightens regulations across the financial industry in an effort to avoid a repeat of the 2007-2009 financial crisis. President Obama is expected to sign the bill into law next week.
The banking industry had fought hard to water down the legislation, which leaves few corners of the financial industry untouched. It establishes new consumer protections, gives regulators greater power to dismantle troubled firms, and limits a range of risky trading activities in a way that would curb bank profits.
The Senate vote caps more than a year of legislative effort after Obama proposed reforms in June 2009. The House of Representatives approved the legislation last month.
Although Obama originally had hoped for bi-partisan support for reform, only three Republican senators voted in favour of the bill, joining 55 Democrats and two Independents. One Democrat opposed it.
The bill aims to curb lucrative trading in risky over-the-counter derivatives and force banks to end trading for their own profits.
Under the 2,300-page bill, mortgage brokers, student lenders and other financial firms will have to answer to a new consumer protection authority.
Regulators, who scrambled to contain the damage from failing firms like Lehman Brothers in the last crisis, will have new authority to dismantle troubled firms if they threaten the broader economy.
A council of regulators will monitor big-picture risks to the financial system and many large banks will have to set aside more capital to help them ride out tough times.
Large private-equity and hedge funds will face more scrutiny from federal regulators, and credit rating agencies could potentially see their entire business model upended.
Even after the legislation is signed into law, financial firms will face years of uncertainty as regulators put the measures into effect.
