WASHINGTON (CNNMoney.com) -- The Senate on Thursday passed the most sweeping regulatory overhaul of the financial system since the New Deal.
The bill, which passed 59-39, imposes more oversight and stronger capital cushions for the largest banks and Wall Street firms, while aiming to stop bailouts, shine a light on complex financial products and strengthen consumer protection.
The bill only needed 51 votes to pass. Four Republicans voted for it and two Democrats voted against it. Earlier in the evening, the bill cleared a tougher hurdle, a 60 vote threshold, to end debate.
"Those who wanted to protect Wall Street, it didn't work. They can no longer gamble away other people's money," said Majority Leader Harry Reid. "When this bill becomes law, the joyride on Wall Street will come to an end," he added.
Senate passage marks the last big hurdle for an effort more than a year in the making. The bill will now be reconciled with the House version in "conference" negotiations, where differences are ironed out.
Then both chambers will vote again and send the compromised bill to President Obama sometime before July 4, said the bill's main shepherd, Sen. Christopher Dodd, D-Conn.
Earlier on Thursday, Obama praised the Senate's progress saying, "Wall Street reform will bring greater security to folks on Main Street."
What reform means: Congress first started working on financial overhaul last spring. The House passed a version in December, and the Senate began drafting bills last November.
Since January 2009, financial services firms have spent nearly $600 million and hired hundreds of lobbyists to influence the debate, according to the Center for Responsive Politics.
The legislation would establish a consumer financial protection regulatory agency that could write new rules to protect consumers from unfair or abusive mortgages and credit cards.
It would create a council of regulators that would sound an alarm before companies are in position to trigger a financial crisis. The bill would also establish new procedures for shutting down giant financial firms that are collapsing.
The bill aims to shine a brighter light on some of the different kinds of complex financial products, called derivatives, that are blamed for bringing down financial companies such as American International Group (AIG, Fortune 500) and Lehman Brothers. It would force most derivatives on to clearinghouses and exchanges, to help pinpoint the value of the trades.
Republicans objected to some of the bill's major provisions, particularly parts that establish the consumer agency and create new rules for the derivatives. While they generally favored more consumer protection and more regulation of derivatives, they argued that the legislation is too heavy-handed in these areas.
Sen. Richard Shelby, R-Ala., who helped craft parts of the bill, blasted it in a 30-minute speech late Thursday, calling it a "massive new consumer bureaucracy" and a "liberal activists' dream come true."
"This bill doesn't listen to the American people -- it promises massive government overreach in ordinary business transactions," Shelby said.
However, the final vote garnered more Republicans than earlier key Senate votes on the bill.
Joining Democrats were Sens. Scott Brown, R-Mass, Susan Collins, R-Maine, Chuck Grassley, R-Iowa, and Olympia Snowe, R-Maine.
Two Democrats, Sens. Russ Feingold of Wisconsin and Maria Cantwell of Washington, voted against the bill saying it wasn't aggressive enough against Wall Street.
Sen. Robert Byrd, D-W.Va., and Sen. Arlen Specter, D-Penn., missed the vote.
What's next: The Senate will appoint 12 members, seven Democrats and five Republicans, to negotiate with the House over differences in the bill.
The Senate's negotiators plan to vote next week to figure out where they stand on a controversial issue that didn't make into the final bill: a Republican-backed move to exempt auto dealers from the purview of the proposed new consumer protection regulator. The House version has that carve-out for auto dealers, but the Senate didn't get to it.
There are several other key differences.
The Senate bill limits the size and scope of banks' investment activities, preventing them from owning hedge funds and trading on their own accounts. It also includes a controversial measure preventing banks from trading any derivatives. Banks would be forced to spin off their swaps desks that make these trades.
The House bill lacks such limits on banks' investment work.
Also, while both versions of the bill create a council of regulators who monitor big Wall Street banks, the Senate gives the top job of running that panel to the Treasury Secretary and the House gives the top position to the Fed chairman.
"The two bills are very similar, and the House is ready to go to conference to work out the remaining issues," House Financial Services Chairman Barney Frank, D-Mass., said in a statement. "I am confident that we can have a bill ready for President Obama's signature very soon."