The 1,500-page reform bill is likely to lead to thousands of pages of new financial regulation. Two years after the greatest financial crisis since the Great Depression, we have the most sweeping reforms since the Depression, CBS News Correspondent Anthony Mason reports.
From banks, which face tighter regulation, to consumers, who'll get more protection, the financial system will be transformed.
"I think the most significant thing here is the shear breadth," the Brookings Institution's Douglas Elliott said.
The reforms establish a new consumer financial protection bureau within the Federal Reserve. The agency, which would have an independent chief appointed by the president, would police lending on products like mortgages, credit cards and student loans, but auto dealers are exempt from its oversight.
"The consumer protection bureau will have teeth," said Elliott. "It will make a difference. That's one reason the banking industry is scared of it."
The final legislation is far tougher than the banks expected. It gives the Federal Deposit Insurance Corp. power to unwind failing financial firms and forces the banks to pay for it. It also prevents banks from making risky bets with their own funds, pushing the trading of complicated derivatives onto regulated exchanges. Derivatives made the banks billions but also exposed them to catastrophic losses.
"It's those sudden and unexpected gambling losses that lead to the kind of institutional failures that require expensive bailouts," said Lynn Stout of UCLA School of Law.
All this will hit the banks where it hurts, on their bottom line.
"Are they going be as profitable? No," said Paul Miller, a bank analyst for FBR Capital Markets. "Are they still going to make money? Yes."
The American Bankers Association said in a statement Friday it's still "strongly opposed" to the legislation, which it said will "ultimately harm Main Street." Miller said the reforms will likely lead to tighter credit and higher fees.
"You're going to see people get notices by the end of the year on their credit cards that they'll be kicked out of the credit card," said Miller. "You will see free checking accounts going away."
It took a devastating financial crisis for Congress to pass the sweeping reforms, but will they be enough to prevent a reoccurrence?
"Next financial crisis - and there will be another one - won't be as big, and it will be farther off in the future," Elliott said, "because of this bill."
It will now be the Federal Reserve's job's to keep an eye out for the next crisis. The Fed has been made responsible for the safety of the system and comes out this even more powerful.
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