A financial reform bill passed the Senate on Thursday (July 15) and only needs President Obama’s signature to become law. Approved on a bipartisan vote, 60 to 49, the legislation is aimed at shoring up – and providing new – regulations for government entities overseeing the nation’s financial and banking sectors.

The 2,300-page bill includes derivatives market reforms introduced by Arkansas Sen. Blanche Lincoln. Following the vote, Lincoln said “As Chairman of the Senate Agriculture Committee, I am proud to have helped craft the bill’s strong derivatives title. This legislation brings a $600 trillion unregulated derivatives market into the light of day, ending the days of Wall Street’s backroom deals and putting this money back on Main Street where it belongs. It also prevents excessive speculation, stabilizing energy prices for consumers and providing certainty in the commodity markets for our farmers and ranchers. These reforms will get banks back to the business of banking, protect innocent depositors and ensure taxpayers will never again have to foot the bill for risky Wall Street gambling.

“American families and small businesses are still managing the consequences of the reckless behavior that occurred on Wall Street and led to our near economic collapse over two years ago. Failure to respond to this crisis by providing appropriate oversight and regulation of Wall Street’s activities is simply irresponsible. That is why I am proud that the Senate has approved a bill that brings real reform to our nation’s financial markets, giving Arkansans the accountability and transparency they expect and deserve.”

Besides derivatives reform, the new legislation calls for the creation of a consumer financial protection agency, a body to monitor systemic risk and a non-bank resolution authority. As happens with farm bills, once the financial bill is on the books, interpretations by government oversight agencies will begin.

Among those pleased with the passed legislation was the National Farmers Union. “Farmers need stability in commodity markets in order to function,” said Roger Johnson, NFU president. “This bill brings meaningful reform to our economy. It reverses the trend of reckless deregulation of the financial sector which has brought great harm to American family farmers and ranchers and our economy as a whole.”

While clamping down on egregious speculation, the NFU pointed out the bill has “an exemption for legitimate end-users of commodities — the farms and businesses that physically use the commodities. It closes loopholes that have allowed speculators to undermine the price discovery functions of the commodity markets and imposes aggregate position limits on traders to better regulate market manipulation.”

However, not all were happy with the bill.

“It is unfortunate that this reform effort has morphed into an oversized measure that expands the federal government’s role in everyday commerce,” said Mississippi Sen. Thad Cochran. “The bill goes well beyond the reforms needed to end the reckless financial actions taken on Wall Street.

“I am concerned about the inevitable uncertainty this legislation will create throughout the economy as businesses try to determine how they might be affected by new federal agencies and regulations. There are uncertainties about the availability of credit for consumers and small businesses as new rules are issued. This uncertainty, I believe, will contribute to a lack of job creation and private sector investment — just what we need to grow the U.S. economy.”

Pointing out he’d been a member of the conference committee, “I unfortunately witnessed first-hand the complete disregard for addressing the real issues at hand,” said Georgia Sen. Saxby Chambliss, ranking member of the Senate Agriculture Committee. “This legislation will in fact enable regulators to impose restrictions on businesses that had nothing to do with creating the financial crisis. These types of entities were clearly not the cause of the economic crisis, and yet, they will now be subject to the same regulations as the large financial institutions on Wall Street.”

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