The overhaul of the US financial sector cleared its last big hurdle in Congress on Thursday as 60 senators voted in favour of the legislation, which introduces a raft of restrictions on banks to curb risk.

More than a year after the mammoth legislative effort began, Democrats managed to persuade three Republican senators to support the Dodd-Frank bill, enough for the 60-vote supermajority needed to bring debate to a close. Read more

“In the recent financial crisis, the ratings on structured financial products have proven to be inaccurate,” reads p822 of Dodd’s bill. “The activities of credit rating agencies are fundamentally commercial in character and should be subject to the same standards of liability and oversight as apply to auditors, securities analysts, and investment bankers.”

Well, Mr Dodd’s wish might just have come true. The WSJ is reporting agreement between the House and Senate:-

A panel of Senate and House lawmakers negotiating final details of a financial-overhaul bill agreed this week to

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Simone Baribeau

The FT has just reported that “Republicans want checks on a proposed consumer financial protection bureau and the crisis powers of regulators as the price for supporting a landmark regulation effort.” Republicans criticise the proposed bureau, which would be housed in the Federal Reserve, for having too much independence.

Democrats have championed the consumer protection bureau in the strongest possible terms. Barack Obama told banks last week, “Unless your business model depends on bilking people, there is little to fear.” And Elizabeth Warren, chairman of the Congressional oversight panel told the Huffington Post last month: “My first choice is a strong consumer agency…My second choice is no agency at all and plenty of blood and teeth left on the floor.” Read more

… and apparently the Republicans are warming to it. Early days and no doubt there will be many more posts on this topic. But for now, here’s what we have.

From Tom Braithwaite, ft.comRead more

Simone Baribeau

That other real estate market came back into the spotlight today as Chris Dodd, chairman of the Senate Banking Committee sent letters to a number of regulators, including the Federal Reserve, asking them to report on their efforts to stabilise the commercial real estate market.

By any realistic estimate, CRE has yet to finish wreaking havoc on the economy. Nearly half of CRE loans are currently “underwater” and the largest loan losses haven’t yet occurred, according to the Congressional Oversight Panel. Read more

Krishna Guha

Congress may not share Bernanke’s vision of what the Fed should look like, writes Krishna Guha of the Financial Times
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