WASHINGTON (CNNMoney.com) -- The Senate on Thursday afternoon passed the most sweeping set of changes to the financial regulatory system since the 1930s, sending the Wall Street reform bill to President Obama.
The Senate voted 60 to 39 to pass the reforms, ending more than a year-long effort to pass legislation in response to the 2008 financial crisis. Obama is expected to sign the bill into law next week.
The bill aims to strengthen consumer protection, rein in complex financial products and head off more bank bailouts.
To secure enough votes, Senate Democrats made lots of deals, which watered down the bill. For example, Wall Street banks will get wiggle room to make limited risky bets, which is tougher than the current law, but weaker than earlier drafts.
How did we get here? Congress first started discussing an overhaul of the financial regulatory system in spring 2009.
After the House and Senate passed different versions of reforms, top negotiators from both chambers spent two weeks finding common ground.
The effort has been a bonanza for financial industry lobbyists. The sector spent nearly $600 million on lobbying since January 2009, according to the Center for Responsive Politics. Some 1,000 lobbyists were hired at some point since 2009 to influence the debate, according to Public Citizen, another watchdog group.
What reform means: The legislation would establish a Consumer Financial Protection Bureau inside the Federal Reserve that could write new rules to protect consumers from unfair or abusive practices in mortgages and credit cards.
The bill creates a new council of regulators, lead by Treasury, that would set new standards for how much cash banks must keep on hand to prevent them from ever triggering a financial crisis. It would also establish new procedures for shutting down giant financial firms that are collapsing.
The measure would put new limits on Wall Street banks' speculative bets for their own accounts and their ability to own hedge funds, while leaving the door open for some investment activities.
The bill aims to shine a brighter light on some complex financial products, called derivatives, that are blamed for exacerbating the collapse of financial companies such as American International Group (AIG, Fortune 500) and Lehman Brothers.
It would force most derivatives onto clearinghouses and exchanges, to better pinpoint the value of the trades. And it would insert a middleman between trades, so that financial firms are less interconnected, to prevent the domino effect of financial firm failures in 2008.
"We made a promise in the fall of '08 that we'd do everything in our power to see to it we'd never again put the American public in the position we were in September and early October 2008," said Sen. Christopher Dodd, D-Conn. "And we have fulfilled that promise with this legislation."
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.
They also object to the fact that the bill virtually ignores the increasingly insolvent government-owned mortgage giants Fannie Mae and Freddie Mac, beyond studying their problems.
"[This bill] is widely expected to stifle growth and kill jobs," said Senate Minority Leader Mitch McConnell, R-Ky.
In fact, House Minority Leader John Boehner, R-Ohio, called for the repeal of the reform bill hours before the Senate even passed it.
Yet Republican Maine Sens. Olympia Snowe and Susan Collins, as well as Massachusetts Sen. Scott Brown voted for the bill, joining 57 Democrats to limit debate and move forward. One Democrat, Sen. Russ Feingold of Wisconsin opposes the bill, saying it isn't aggressive enough against Wall Street.
What's next: After it's passed, the bill is expected to be signed into law as early as Friday. Then regulators take over.
The bill leaves many tough decisions in the hands of federal regulators, ranging from the size of bank capital cushions to how much collateral firms must post to make a derivative trade.
Obama is expected to move quickly to appoint the Consumer Financial Protection Bureau's first chief, who will get broad authority in figuring out the agency's agenda.
Assistant Treasury Secretary Michael Barr said Wednesday that the consumer agency has a couple of mandates it needs to take care of first, such as coming up with a standard simplified application that mortgage originators can choose use.
"Congress has given pretty clear direction on what they'd like to see the agency start with," said Barr, who is widely considered a top candidate to run that agency. Barr wouldn't respond to a question about whether he was interested in the job.
Championship women's World Cup team paid only $2 million, while championship men's team got $35 million in 2014. More
Greece has nearly run out of cash and experts say the country could soon be forced to print a new currency. This step-by-step guide explains how the nation could re-introduce the drachma. More
Facebook's Sheryl Sandberg is joining the board at SurveyMonkey, her late husband's online survey and polling company. More