WASHINGTON Reveling over a new milestone in his presidency, a triumphant Barack Obama on Wednesday signed into law the most sweeping overhaul of lending and high-finance rules since the Great Depression, adding safeguards for millions of consumers and aiming to restrain Wall Street excesses that could set off a new recession.
The presidents signing ceremony capped nearly two years of intense debate about how to avoid a recurrence of the 2008 financial meltdown that buckled the U.S. economy and has left sharp, lasting imprints on the nations politics and in Americans homes.
In a heated midterm election season that has put a dent in his public support, Obama sought to put the complex law in pocketbook terms. Emphasizing provisions that guard borrowers from abusive lenders, he claimed the strongest financial protections for consumers in the nations history.
Not everyone agreed. Republicans portrayed the bill as a burden on small banks and the businesses that rely on them and argued that it will cost consumers and actually impede job growth.
The law, approved by a Congress mostly divided along partisan lines, represents the most ambitious effort to clamp down on banks and the financial markets since the Great Depression. It attempts to catch up to a system that has sped ahead of regulation and that, in many instances, has allowed traders and others to benefit from decades of slackened rules.
Wall Streets near collapse, Obama said, was a crisis born of a failure of responsibility from certain corners of Wall Street to the halls of power in Washington.
The new rules, however, are only at a midpoint. Banking and market regulators will have as long as two years to write many of the new regulations required by the law, extending uncertainty and ushering in a new phase of lobbying by financial firms.
The president sought to quell public anger about the $700 billion bank rescue fund the government created at the height of the crisis to reassure the markets. While the infusion is credited with providing stability, the public recoiled at the idea of taxpayer money being used to help prop up huge banks.
The law gives regulators new authority to liquidate large, interconnected financial firms that are failing.
Because of this law, the American people will never be asked again to foot the bill for Wall Streets mistakes, Obama said. There will be no more tax-funded bailouts, period.
The law, however, does permit the Federal Deposit Insurance Corp. to borrow taxpayer money from the Treasury temporarily to help cover the costs of winding down a large firm. Other large banks would have to pay the Treasury back over time.
The law assembles an influential council of regulators to be on the lookout for risks across the finance system. It also creates a powerful independent consumer financial protection bureau within the Federal Reserve to write and enforce new regulations covering lending and credit.
It places shadow financial markets that previously escaped the oversight of regulators under new scrutiny and gives the government new powers to break up companies that threaten the economy.
Major Wall Street banks have welcomed some provisions in the bill but have fiercely opposed others that would limit their banking business and cut into their profitability.