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Senate Lifts Financial Barriers

The U.S. Senate Thursday approved a sweeping overhaul of financial regulations in effect since the l930s, reports CBS News Anchor Dan Rather.

The vote was 90-8.

Essentially, the Senate voted to remove Depression-era barriers and allow banks, securities firms and insurance companies to get into each other's businesses.

Final approval is expected in the House. President Clinton says he will sign the bill into law.

The White House lifted a long-standing veto threat after administration officials reached a compromise with key Republican lawmakers on community lending rules for banks.

One of the few Senate dissenters, liberal Sen. Paul Wellstone, D-Minn., argued that the bill did not contain adequate consumer protection. He asserted that it would result in "price-gouging" of consumers and "the concentration of more and more economic power in the hands of fewer and fewer people."

But Sen. Paul Sarbanes of Maryland, the Banking Committee's senior Democrat, said the legislation "would provide meaningful consumer protections." He said it would "put in place a rational legislative framework for the future evolution of the U.S. financial services industry."

Opposing the bill were one Republican, Sen. Richard Shelby of Alabama, and Democratic Sens. Barbara Boxer of California, Richard Bryan of Nevada, Byron Dorgan of North Dakota, Russell Feingold of Wisconsin, Tom Harkin of Iowa, Barbara Mikulski of Maryland and Wellstone.

Sen. John McCain, R-Ariz., was absent, and Sen. Peter Fitzgerald, R-Ill., refrained from voting to avoid a conflict of interest; he owns a large stake in the Bank of Montreal, which previously bought his family's Illinois bank.

Separate versions cleared the House and the Senate earlier this year, and lawmakers and their aides have spent months negotiating and blending the two.

In debate on the Senate floor, the Banking Committee chairman, Republican Phil Gramm of Texas, promised the legislation would "bring every city and town in America a financial supermarket...[and] a diversity of financial products that we have never seen before."

Opponents of the measure, including consumer groups and liberal House Democrats, are disturbed by provisions that would allow affiliated businesses of the newly merged companies to share customers' personal financial data as they offer one-stop shopping for loans, insurance and investments.

"By allowing banks, insurance companies and mutual funds to misuse our most private information, the bill lets companies profit at the expense of their customers," said Gregory Nojeim, legislative counsel for the American Civil Liberties Union.

But proponents say the bill would save consumers billions of dollars a year by giving them greater choice and convenience, and would give the nation's financial services industries a competitive edge in the world market.

"This legislation will modernize our financial services lawto better enable American companies to compete in the new economy," Treasury Secretary Lawrence Summers said in a letter Wednesday to House and Senate leaders of both parties.

"The bill will stimulate competition, thereby increasing choice and reducing costs for consumers, communities and businesses," he wrote.

Americans spend more than $350 billion a year on fees and commissions for banking, brokerage and insurance services, Summers said. He suggested that if enhanced industry competition brought consumers savings of even 5 percent, they would save more than $18 billion annually.