As President Obama continued to make stops around the country talking up the progress being made on the economy, the Senate was finally able to pass the Restoring American Financial Stability Act of 2010, or Wall Street reform.  The Senate passed the bill 60-39, reaching the same mark as they did for cloture even when they only needed a simple majority for the final vote.

Today he was in Holland Michigan speaking at the ground breaking of Compact Power, Inc. a subsidiary of LG Chem Ltd., a battery plant.  Funding for the plant came from the President's stimulus package and is the ninth advanced battery plant constructed due to the government's investment.  The White House expects American batteries made in these plants for electric vehicles will comprise 40% of the world market by 2020, subsequently bringing thousands of jobs to hard hit Michigan.

While that is good news for the President and Americans, in light of an admittedly high level of unemployment across the country, the news that the Senate finally passed Wall Street reform after a long filibuster by Republicans is a weight off of the President's shoulders.  Since the financial collapse began in 2007 with the fall of Bear Sterns and culminating in spectacular fashion during the 2008 Presidential election, legislators from both the previous and current Congress have been working on a compromise to bolster confidence in the economy and ensure the safety of it for the consumer.

Under the Bush administration Congress passed TARP (Troubled Asset Relief Program) to bail out banks who had over leveraged themselves a staggering 30 or 40 times.  Banks had taken really crappy mortgages, bundled them into CDOs (Credit Default Swaps), convinced the ratings agencies that these BBB insurance swaps were actually AAA, then instead of selling a tranche once, they would sell duplicates of them over leveraging themselves.  On top of that, the brokers who were selling the crappy CDOs got rich through brokerage fees while their clients lost everything.  Everyone on Wall Street was fine.

Once President Obama took office in January of 2009 he was left to run TARP while newly appointed Federal Reserve head Ben Bernanke agreed to pour many more hundreds of billions of dollars into the financial sector, guaranteeing so called toxic assets like the crappy mortgage bundles which had infected practically everyone including mortgage giants Freddie Mac and Fanny Mae which had to be essentially taken over. 

Critics say that the financial reform bill doesn't address the concept of 'too big to fail,' something which has been discussed a lot among politicos and media.  Even members of Congress have said that they really won't know if what they passed is going to prevent another catastrophic collapse, agreeing that we'll have to wait until the next crisis to see what needs to be changed.

However, among the new rules is the creation of a Consumer Financial Protection Agency housed within the Federal Reserve that would set and enforce rules for the marketplace.  It will be run by an independent group within the Fed, but there will be a panel able to veto rules drafted by the agency if it feels the rules would negatively affect the market.  That being said, perhaps more important than the Consumer Protection Agency was the addition of new derivatives rules.  I suppose saying 'new' would imply that there were old rules, but that is not really the case because up until now the derivative market was essentially invisible to scrutiny.  After the President signs the bill next week the Commodity Futures Trading Commission will be the new watchdogs of the majority of derivatives and is now able to force foreign exchanges to register before doing business in the country.  Banks will also be limited in the amount of speculation they can engage in through derivatives to deprive them of the ability to over leverage themselves again.

With the August break looming and the mid terms on the horizon, this should be welcome news for Democrats looking to alleviate the anger and fear continuing to simmer over what many have seen as government coddling of big banks, all while unemployment is hovering near 10%.  Democrats will need to try and sell what they have been able to accomplish in what I must say has been incredibly productive Congress considering the constant stonewalling by Republicans.