Senate approves sweeping financial overhaul

By Matt Viser, Globe Staff

WASHINGTON – The Senate this afternoon approved a massive financial overhaul proposal, capping more than a year of intense debate and delivering President Obama his second major legislative victory.

A trio of New England Republicans – Scott Brown, of Massachusetts, and Olympia Snowe and Susan Collins, both of Maine – joined 57 Democrats in supporting the bill. One Democrat, Russ Feingold of Wisconsin, voted with 38 Republicans, saying the measure did not go far enough.

“This is a major undertaking, one that is historic in its proportions,” Senator Christopher J. Dodd, a Connecticut Democrat and a primary author of the legislation, said this morning on the Senate floor.

The 2,300-page bill, meant to address the problems that led to the 2008 economic collapse, will add new regulators to try and foresee future financial problems; create a new consumer protection bureau designed to protect consumers from predatory lenders; and implement new regulations that will curb some of the risky practices that helped contribute to the economic downturn.

Brown, Snowe, and Collins provided crucial support for the legislation after gaining concessions from Democrats. In Brown’s case, he fought for protections that will minimize the impact of the new regulations on Massachusetts-based institutions such as State Street Corp. and MassMutual.

“It’s not perfect,” Brown said in an interview just after he voted. “But it does a lot of positive things.”

“It is a very important step forward in terms of redressing the balance of interest and power within the financial sector,” Senator John F. Kerry, the Massachusetts Democrat, said in an interview. “And I think it sets up some very important standards and requirements.”

The Senate passed the bill about two weeks after the House, led by Representative Barney Frank of Newton.

President Obama will likely sign the bill in a ceremony next week, giving Democrats a key boost heading into November’s midterm elections. The bill marks the second major legislative victory for Obama, following the hard-fought passage of an overhaul to the nation's health care system earlier this year.

Republicans plan to use the bill, too, as a political weapon. They say the bill reaches too far into private business practices, and doesn’t do enough to address some of the key economic problems, such as regulating mortgage giants Fannie Mae and Freddie Mac.

"All told, this bill would impose 533 new regulations on individuals and small businesses,” Senate Minority Leader Mitch McConnell said this morning. “Once again, the administration and its Democrat allies in Congress have taken a crisis and used it, rather than solving it.”

Even Democrats have conceded that it is not clear whether the new regulations will prevent future problems. Much of that will depend on how the regulations are implemented in the coming weeks.

"It is not a perfect bill, I will be the first to admit that," Dodd said. "It will take the next economic crisis, as certainly it will come, to determine whether or not the provisions of this bill will actually provide this generation or the next generation of regulators with the tools necessary to minimize the effects of that crisis."

Brown’s vote was seen as crucial. He said this afternoon that he initially dismissed it, but got involved about several months ago when President Obama began criticizing Republicans for their ties to Wall Street.

“I wasn’t going to participate at all, but then the president started with the whole ‘Main Street, Democrats -- Wall Street, Republicans,’” Brown said in the interview. “And I’m like, what does that mean? We have an opportunity to make a good bill here, and the fact that he was trying to link us to being in bed with Wall Street was offensive. So I was kind of dragged into it. I’m not looking out for Wall Street. I’m looking out for Massachusetts.”

Matt Viser can be reached at maviser@globe.com.