After negotiating all night, leaders of a conference committee shook hands on the deal at 5:39 a.m., Eastern Time.
The bill forces Wall Street banks to spin off their riskiest investments, like the ones that nearly caused the economy to collapse two years ago.
It also sets up a financial warning system, and allows the government to liquidate large failing firms.
"The reforms working their way through Congress will hold Wall Street accountable so we can help prevent another financial crisis like the one we're still recovering from. They will put in place the toughest consumer protections in our history, while creating an independent agency to enforce them," Obama said.
Obama hopes to sign the bill by the 4th of July.
This bill sets up a consumer financial protection bureau that will write and enforce rules for retail lenders. Consumer advocates are disappointed, however, because auto dealers making car loans will not be regulated.
For the first time, you'll be able to get a free credit score, but only if something bad has happened. If you are charged higher interest rates, denied an apartment or job because of a bad credit score, you will have the right to see the number for yourself.
Mortgages will get the once over with many prepayments penalties and origination fees regulated. Banks will also have to verify the home buyer's ability to pay. so no more liar loans.
Stores will be allowed to place a minimum purchase amount on credit and debit card sales, up to ten bucks. Federal agencies and universities will have the right to limit how much they will accept on a credit card.
Also, part of the package is a provision allowing states to pass even tougher laws than the ones in the bill.