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Washington. President Barack Obama claimed a moment of history on Wednesday as he signed into law the most wide-ranging finance reform since the Great Depression in the 1930s.

The legislation, which some Republicans have already pledged to repeal if they regain power in Washington, will fundamentally overhaul the government’s regulation of Wall Street and bolster Obama’s political legacy.

The president says the bill will cut down on a culture of greedy risk-taking and “shadowy deals” that triggered the worst financial crisis in generations.

His opponents argue that the legislation punishes the whole banking industry for the sins of the few, and is yet another example of government intervention in the economy that will choke growth.

The administration touts the law as an example for the rest of the world, as top global economies seek to flush out the causes of the crisis, from which they are now only slowly emerging.

Obama signed the financial reform legislation at the Ronald Reagan Building in Washington, and in the process bolstered his claims as a significant reformer, following his health care overhaul passed this year.

The financial reform bill may eventually become popular with everyday Americans, but much of it, like the health care bill, is so complicated that it will not come into force for months.

For instance, it will be up to 12 months before a new Consumer Financial Protection Bureau is set up to protect American consumers from hidden fees and deceptive lending practices when they get a mortgage or credit card.

Similarly, it will take up to 18 months to set up regulations to stop banks from engaging in impermissible proprietary trading and investment in hedge funds — a system known as the Volcker rule after former Federal Reserve chief Paul Volcker.

The legislation also closes loopholes in regulations and requires greater transparency and accountability for hedge funds, mortgage brokers and payday lenders, and arcane financial instruments called derivatives.

The bill “addresses a number of key weaknesses in the US financial regulatory structure that led to the financial meltdown in 2008 and early 2009,” said Brian Bethune, of IHS Global Insight.

But Diane Swonk, of Mesirow Financial, warned that much of the impact was not known.

“We will have more regulators overseeing — but not necessarily averting — risk, and with a bill so large and undefined, we are likely to get more unintended than intended consequences going forward,” she said.


Agence France-Presse