Financial overhaul heads for final vote

June 26, 2010 at 12:00a.m.

Associated Press

WASHINGTON

The toughest financial regulations since the Great Depression, covering everything from debit-card swipes at Starbucks to the most complex securities, are headed for final votes in Congress next week in an election-year salve for public anger over Wall Street risk-taking.

House and Senate bargainers approved the deal as the sun rose Friday, giving President Barack Obama a fresh campaign-season triumph after his health-care overhaul — and an achievement to tout at the weekend global-economic summit in Toronto.

Democrats hope lawmakers can pass the legislation and ship it to Obama for his signature by July 4, capping a burst of action prompted by the worst recession in seven decades.

The legislation creates a new federal agency to police consumer lending, sets up a warning system for financial risks, forces failing firms to liquidate and maps new rules for instruments that have been largely uncontrolled.

Though some financial analysts said it would set tough new restraints on banks, others said they would simply find new ways to make money by getting around the rules and establishing new fees.

Bank stocks soared as investors appeared relieved that the rules were not as strict as they’d feared. Bank of America Corp. stock rose more than 2 percent, and Goldman Sachs Group Inc. and JPMorgan Chase & Co. each posted 3 percent gains.

As it reins in banks and sets new rules for high finance, the legislation also reaches down to some of the most commonplace consumer transactions.

The Federal Reserve will have to set new limits on the fees banks charge merchants who accept debit cards. Retailers, who would stand to save billions in payments, would be able to offer customers reduced prices for debit-card use. Banks said the limits could simply shift costs to other banking products.