The Senate, House, and White House reached an agreement early this morning on financial reform legislation, which will increase regulation of Wall Street's most dangerous activities, protect consumers, and hopefully prevent another financial collapse like the one we're still trying to claw our way out of. While "large financial companies are facing a tougher leash," as The Wall Street Journal says, and the legislation actually became tougher over time, the conference committee's final agreement does bear the necessary marks of a compromise.
Lawmakers agreed to the the Volcker Rule, but, to get the support of Senator Scott Brown, decided to "allow financial companies to make limited investments in areas such as hedge funds and private-equity funds." Blanche Lincoln's controversial derivatives proposal was also accepted, but limited to the riskiest investments owing to pressure from a group of New York representatives concerned about its effect on the city's banking industry. In addition, despite opposition from the White House, auto dealers will be exempt from oversight of the Consumer Financial Protection Bureau, "a major victory for one of the most active lobbying groups on the financial bill in recent weeks." And even before the conference committee, some reforms that once seemed possible, like an overhaul of Fannie Mae and Freddie Mac, were just entirely ignored. Still, President Obama has to be overjoyed to achieve, along with health-care reform, the "second victory toward [his] legislative triple crown," as Politico puts it.