17 Jul 2010

Senate approves US financial reform

2:45 pm on 17 July 2010

The US Senate has approved an overhaul of the country's financial system, aimed at avoiding a repeat of the financial crisis that resulted in a global downturn.

The reforms include new government powers to break up any company that becomes so big its failure could threaten the economy.

The legislation is designed to reduce the risks that banks take, and boost protection for consumers, the BBC reports.

The Senate vote is a major victory for President Barack Obama, who says the bill will mean the US public will never again foot the bill for Wall Street's mistakes.

"If a large financial institution should ever fail, this reform gives us the ability to wind it down without endangering the broader economy," he said.

"There will be new rules to end the perception that any firm is too big to fail, so that we don't have another Lehmann Brothers or AIG."

The head of JP Morgan Chase Jamie Dimon warned the competitiveness of US banks needs to be protected, and global financial reform needs to be co-ordinated and not choke off the US economic recovery.