President Barack Obama on Wednesday signed the most sweeping set of financial rules since the Great Depression, kicking off an election-year fight to define how the law will be put into effect.
“This reform will help foster innovation, not hamper it,” Mr. Obama said during a bill-signing ceremony at the Ronald Reagan Building in downtown Washington. “It is designed to make sure that everyone follows the same set of rules, so that firms compete on price and quality, not tricks and traps.”
With his signature, Mr. Obama capped a yearlong legislative struggle to draft and pass the measure, spurred by the 2008 financial crisis that triggered the collapse of Lehman Brothers Holdings Inc. and dragged down Wall Street and the U.S. economy.
The law, named after its principal authors, Sen. Christopher Dodd, D-Conn., and Rep. Barney Frank, D-Mass., imposes new rules on derivatives markets, gives the government new authority to unwind failing financial firms that may threaten the entire system and creates a consumer protection agency at the Federal Reserve to monitor everything from home loans to credit cards.
Mr. Obama said the new rules will provide “the strongest consumer financial protections in history.” He vowed it will bring taxpayer bailouts of financial firms to an end.
Treasury Department and other officials now begin writing the regulations that will give the framework for enforcing the law, a process that may take a year.
In a statement, the $199.4 billion California Public Employees’ Retirement System, Sacramento, praised the new law as a “historic step toward protecting markets and advancing shareowner democracy.”
“At long last, shareowners have achieved the kind of protections critical for restoring confidence,” Rob Feckner, CalPERS board president, said in the statement. “We applaud President Obama and Congress for achieving this comprehensive overhaul that protects the pension assets of our 1.6 million members and all shareowners.”
“We have worked for many of these protections for upwards of a decade, especially for independent boards, access to the proxy, and better executive compensation policies,“ he said. “This reform goes a long way to plug the gaps that contributed to the recent financial crisis. It’s good for shareowners, good for business and for taxpayers.”
News Editor Rick Baert contributed to this story.