Senate Set to Begin Voting on Financial Reform BillThe financial reform bill is the most hotly contested piece of legislation since the health care reform bill, and it goes to the floor of the Senate on Tuesday afternoon, when voting is expected to begin on amendments to it. The bill, which aims to create a new consumer protection watchdog agency within the Federal Reserve; increase federal bank supervision; and end "too big to fail" bailouts, among other goals, was written by Senate Banking Committee Chairman Christopher Dodd (D-Conn.) and is based on a similar proposal by President Barack Obama.

From the get-go, the regulatory overhaul of the financial system has been short on support from Republican senators and fraught with drama. There are more than a few contentious issues: specifically, an amendment that says taxpayers won't have to foot the bill for future bailouts -- the idea is that if the government seizes an institution, it will be liquidated. An equally controversial proposed amendment from Sen. Jim Webb (D-Va.) would impose a 50% tax on bonuses of $400,000 or more at financial firms that accepted $5 billion or more in government bailout funds over the last couple of years.

"Prospects Are Good for Passage"

After blocking deliberation of the bill on the Senate floor for a few days, Republicans gave in so as not to appear too closely aligned with Wall Street. While passage of the bill is hardly guaranteed, some Washington insiders are betting that further filibuster attempts against it will fail.

"My sense is that the reform of the derivatives market will be largely successful," Obama adviser Paul Volcker recently said. "The prospects are good for passage of a reform bill along the lines in the approach set out by the Senate Finance and Agriculture Committees, paralleling in large measure the bill passed by the House last year."

Banking executives seem equally optimistic that some sort of reform will be signed into law. JPMorgan (JPM) CEO Jamie Dimon recently said he agrees with "80%" of the financial overhaul legislation.

To read more of DailyFinance's coverage and analysis of the bill, check out our recent stories, starting with the June 2009 unveiling of President Obama's plans to overhaul the financial system:

  • Obama Reveals Plans to Overhaul Financial Regulation (6/17/09): The president unveiled plans to reform the financial industry, calling it a "sweeping overhaul" designed to remedy a series of "mistakes and missed opportunities" that have hobbled the U.S. economy.
  • Dodd Unveils a Massive Financial System Overhaul (3/15/10): The 1,336-page bill would change how the industry is regulated more dramatically than any law since the Great Depression.
  • Where Dodd's Financial Overhaul Seems Likely to Miss the Mark (3/15/10): With Dodd is retiring from office this year, that pending departure frees him from the need to kowtow to the financial services firms or to the lobbyists who shape the rules that oversee their industry.
  • Obama to Wall Street: We Need 'Basic Safeguards That Prevent Abuse' (4/22/10): The president called on lawmakers to take swift action on financial regulatory reform and change the way Wall Street does business. The most sweeping changes since the Great Depression would break up too-big-too-fail institutions, cast light into some of the darkest corners of the financial system, and create new consumer protections.
  • In Financial Reform Drama, Industry Displeasure With Obama's Speech (4/23/10): It's no surprise financial services companies aren't happy with President Obama's tough speech at Cooper Union in New York on April 22, in which he called on them to support his financial reform efforts. "He completely demagogued the industry. I don't know a single company that opposes legislation, and he runs around saying Wall Street's opposing this. . .I think it's unconscionable," said one industry lobbyist.
  • How Financial Reform Could Benefit Wall Street (4/26/10): Despite some rumblings, many traders say they like what they've heard so far. Ultimately, its aim is to benefit both Wall Street and Main Street by ushering more transparency and faith into the markets.

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