Haggling over financial reform went on long into the night on Thursday, with pressure to present a finalized bill in time for the G-20. Now, the bill has reached its final form to be approved in the House and Senate. What's in it, and have the strong provisions survived? Here's the analysis, which, at least for the first round, is somewhat critical of the bill's compromises, while recognizing its historic magnitude.

  • Volcker Rule, Cap on Hedge Fund Investing, Tax to Pay for Bill "A watered-down ban of proprietary trading, also known as the Volcker Rule, passed," explains The Atlantic's Daniel Indiviglio in a 5:30 a.m. breakdown. House Republicans worry that, without other nations enacting similar policies, U.S. competitiveness will take a hit. "The final version of the rule would allow banks to participate in private equity and hedge funds up to 3% of their tier 1 capital. They could only, however, have up to 3% ownership of any private equity or hedge fund." There's also a "conflict-of-interest provision ... which was inspired by the Goldman-SEC case." The bill will cost $22 billion over 10 years. "Part of that will be paid for by the Securities and Exchange Commission. The remainder, between $15 billion and $19 billion, be paid for by a tax on the financial industry."
  • A 'Massive Overhaul' With Compromises "While many tough provisions in the bill survived," writes Jim Kuhnhenn in the AP report, "securing the votes of moderate Democrats in the House and a handful of Republicans in the Senate meant softening some provisions in the bill." He mentions that some of the "harsher measures" for the trading business were "blunted," while "in a blow to Obama, the consumer protection agency would not regulate auto dealers, even though they assemble loans for millions of car buyers."
  • A Big Deal Alison Vekshin and Phil Mattingly in their coverage for Businessweek introduce the deal as "the most sweeping overhaul of U.S. financial regulation since the Great Depression." They also quote Stuart Eizenstat, Clintonian deputy Treasury secretary: "When one says this is the biggest change in our financial regulation in 70 years, that's not an exaggeration."
  • A Gift to Wall Street? "The most crucial element in the re-regulation of Wall Street has been gutted," asserts Robert Lenzner at Forbes. "At least for now, there will be no limits on how much money Wall Street can borrow to do its business."
  • Doesn't Acknowledge Federal Role in Housing Bubble, writes 24/7 Wall St.'s Douglas McIntyre. He call the bill "the end of banking as we know it." He notes that the Fed's role isn't acknowledged. "The disaster was as much the failure of federal regulators and the Fed's drive a decade ago to get every man, woman, and child into his or her own home. But, that did not matter much to the Administration, the House or Senate." The bill, he says, "eviscerated big banks," while "as usually happens in the federal government, private institutions fare worse than public ones." The Fed is being left largely untouched, aside from slight oversight increase in the form of an audit and "a tracking of its balance sheet actions."
  • Will Probably Pass "The bill is expected to have enough support to become law," writes Damian Paletta for The Wall Street Journal. "Both chambers plan to vote next week."
  • No Recognition of Government Involvement in Crisis Mark Calabria at National Review is fuming. "Nowhere in the final bill will you see even a pretense of rolling back the endless federal incentives and mandates to extend credit, particularly mortgages, to those who cannot afford to pay their loans back. After all, the popular narrative insists that Wall Street fat cats must be to blame for the credit crisis." The bill will regulate the wrong folks, he explains. Furthermore, "the legislation's worst oversight is to ignore completely the role of loose monetary policy in driving the housing bubble. A bubble of such historic magnitude as the one we went through can only occur in an environment of extremely cheap and plentiful credit. The ultimate provider and price-setter of that credit was the Federal Reserve."
  • And the Markets Laughed--Talk About 'Toothless' "Oh yeah, this new financial regulation bill is going to be HORRIBLE for capitalism," snorts Joe Weisenthal over at Business Insider. "That must be why futures began rallying within seconds of the financial reform compromise. Seriously, the timing couldn't be more clear."