US Senate passes biggest, baddest regulatory changes since the Great Depression

On Thursday, the US Senate plucked up its courage and passed its version of the controversial financial reform package. It is bold, brave and risky, but then again, tough times demand tough solutions.

This bill must now be reconciled with the House of Representatives’ version that has already been passed. But the margin of passage in the Senate – a 59 to 39 split that included some Republicans – is probably sufficient to ensure passage in the Senate of any joint-reconciled version.

This Senate vote means Congress is now poised to pass a broad expansion of government oversight of the increasingly complex (and increasingly murky) banking industry and financial markets. The legislation is designed to put measures in place to prevent a repeat of the 2008 financial meltdown. In addition, it simultaneously reshapes the varied roles of numerous federal agencies, and vastly empowers the Federal Reserve Bank, in an attempt to predict and contain future debacles – especially since the current regimen didn’t see that most recent crisis coming, until it hit. According to congressional observers, the whole process should take until early June and then it is on to Obama’s desk for signature.

Although there are some key differences between the two versions, most importantly a provision in the Senate one that would force the big banks to spin off some of their most lucrative derivatives business into separate subsidiaries, the two bills are broadly similar. Congress, and the Obama administration, is therefore poised to adopt what many see will be America’s biggest, baddest regulatory changes since the Great Depression. But, this begs the question of whether it will actually be enough – or is this yet another regulatory barn from which the horse has already fled?