House Approves Financial Overhaul; Senate Vote Awaits

The House of Representatives passed a sweeping overhaul of the nation's financial system Wednesday  setting the stage for a final vote in the Senate where votes for the far-reaching bill remained in flux.

The party-line vote, 237-192, came after Democrats backed down from a $19 billion tax of major banks and hedge funds in hopes of securing Senate Republican votes.

President Barack Obama says House passage of a massive overhaul of financial regulations is a victory for everyone who was hurt by what he is calling Wall Street "recklessness and irresponsibility" that caused the financial meltdown and millions of job losses.

"Never again, never again should Wall Street greed bring such suffering to our country," House Majority Leader Steny Hoyer, D-Md., declared.

Republicans portrayed the bill as a vast overreach of government power that would do little to prevent future bailouts of failing financial institutions.

"This legislation is a clear attack on capital formation in America," said Rep. Eric Cantor of Virginia, the second-ranking House Republican. "It purports to prevent the next financial crisis, but it does so by vastly expanding the power of the same regulators who failed to stop the last one."

The bill now heads to the Senate, which is not expected to take up the measure until after next week's July 4th recess.

At least one crucial Republican senator remained uncommitted, however. The Senate delayed its vote to mid-July, which denies President Obama a victory before the July 4 Independence Day holiday.

The bill, formulated in response to the financial crisis of 2008, would increase federal regulation over banks and end certain practices that proponents felt exacerbated the credit crisis. Supporters say the bill ends the idea that some large financial firms are "too big to fail" and sets up an orderly system to wind down collapsing companies.

Critics claim the bill creates a large new federal bureaucracy and does not address the fundamental sources of the financial crisis. They note that the bill does not deal with Government Sponsored Enterprises (GSEs) like Fannie Mae and Freddie Mac.

Opponents say that these two agencies helped create the financial crisis and continue to receive government bailout funds. Democrats say those enterprises will be dealt with in future legislation.

The Associated Press contributed to this report.