Democrats predict financial reform bill passage

The House and the Senate versions of this financial regulation bill are being called the biggest overhaul of the rules governing Wall Street since the Great Depression.

The landmark legislation will create greater oversight of the financial sector. Though it doesn't break up institutions previously deemed too big to fail, it does create a consumer financial protection agency inside the Federal Reserve.

It will also regulate and have oversight of derivatives and the government will have new powers to go in and take control of any failing financial institution.

"The bill is an important step in the right direction," former Labor Secretary Robert Reich said.

Reich, an advisor to the Obama administration, says the Senate version doesn't nearly go far enough.

"It does not resurrect the Glass-Steagall Act, which puts an iron curtain between commercial and investment banking. It doesn't limit the size of banks," he said.

On Wall Street, there is a good deal of grumbling about the tougher regulations particularly on derivative trading.

"The concern down here is it may intimidate some of the financial institutions, and therefore make credit less available and less likely and hurt the recovery," Art Cashin from UBS Financial Services said.

ABC7 Political Analyst Bruce Cain says the scandal at Goldman Sachs and the criticism of the Obama administration's connections with Goldman contributed to a tougher bill than the Senate might have otherwise passed.

And while the House version of the bill is tougher, it's the Senate version that will dominate because Senate Democrats don't have a filibuster proof majority in the Senate and House Democrats know they need a bill passed before the November elections.

"Passing this bill is a very important step in being able to harness some of the populous anger for themselves as opposed to being directed at Democratic incumbents," Cain said.

Cain says Democratic lawmakers are optimistic they'll have a reconciled bill passed and signed by July 4.

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