Last evening, the U.S. Senate passed a financial regulatory reform bill by a 59-39 vote, including four Republicans. While the legislation still contains some weaknesses (two liberal Democrats voted against it for that reason), it is nonetheless a historic accomplishment -- the strongest such legislation since Franklin Roosevelt. Because of the excesses that led to the current Great Recession, in which millions of Americans lost their homes and jobs, the pendulum has once again swung from an era of an "anything goes" mentality to more careful public oversight and government regulation. As the legislation now goes to a House-Senate conference committee, we must remain vigilant to protect the gains that were made.
There were principles that -- from a moral and even religious viewpoint -- guided our analysis of this legislation. Each of these moral principles is incorporated into the new bill.
The bill provides greater transparency and accountability in financial markets and instruments. The now infamous high-risk and questionable "derivatives" will have to be traded on public exchanges, not in backroom deals. There is even a provision that, if maintained, would likely ban banks from trading derivatives.
Consumer protection is increased through the creation of a new Consumer Financial Protection Bureau. Although the bureau will be in the Federal Reserve, it will have an independent director and dedicated funding. This bureau will have the power to create and enforce regulations to oversee mortgages, credit cards, and other lending practices in order to protect people from fraudulent, misleading, and abusive practices.
Failing banks will now be subject to being taken over and shut down by the government, with shareholders and unsecured creditors taking the losses rather than bailouts at taxpayer expense. A new regulatory council can recommend limits to the risks taken by banks through their increasing capital to cover potential losses.
These principles -- clarity, transparency, accountability, and protecting the common good against private greed -- now give a stronger voice to Main Street in facing Wall Street. And that's an accomplishment we should applaud.
Jim Wallis is the author of Rediscovering Values: On Wall Street, Main Street, and Your Street -- A Moral Compass for the New Economy, CEO of Sojourners and blogs at www.godspolitics.com.
Follow Jim Wallis on Twitter: www.twitter.com/jimwallis