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Editorial: 'Kumbaya' it wasn't

Remnants of bipartisanship still exist in Washington after all. Three Republican senators voted for the landmark bill to overhaul the financial-regulatory system, which President Obama will sign this week. They provided just enough votes to prevent the GOP from blocking this needed legislation.

Remnants of bipartisanship still exist in Washington after all.

Three Republican senators voted for the landmark bill to overhaul the financial-regulatory system, which President Obama will sign this week. They provided just enough votes to prevent the GOP from blocking this needed legislation.

It seems that Sen. Scott Brown of Massachusetts, and Sens. Olympia Snowe and Susan Collins of Maine, are about the only Republican senators willing to work with Democrats on major pieces of legislation these days. They deserve credit for showing some political courage.

No GOP senator from a state south of the Massachusetts Turnpike voted for the bill, which calls for the most significant overhaul of financial rules since the Great Depression. This legislation is Washington's needed response to Wall Street's reckless habits, which helped to cause the financial meltdown of 2008.

The bill attempts to curb Wall Street's risky behavior by limiting banks' ability to invest and trade on their own accounts. On the same day the Senate approved this measure, Goldman Sachs agreed to pay $550 million to settle charges that it misled buyers of mortgage investments. Taxpayers get back $300 million of the fine.

Although it's the largest fine against a financial company in the history of the Securities and Exchange Commission, the penalty amounts to only about two weeks' worth of Goldman's profits. Goldman did also agree to several changes in the way that it does business for the next three years, including more careful reviews of the preparation of its marketing materials.

The legislation also will create a powerful new consumer financial-protection agency, to be housed in the Federal Reserve. Among its aims is to help protect borrowers from abusive lending practices by mortgage and credit card companies.

A new council led by the treasury secretary will have responsibility to detect dangers to the financial system. Government regulators will receive new authority to shut down and dismantle failing institutions before the harm spreads through the financial system. These provisions should help to prevent a repeat of the taxpayer-funded bailouts of 2008.

Big banks will be required to set aside more capital to protect against bad loans. Trading of complex derivatives will be forced onto more transparent exchanges. Shareholders of public companies will be given a nonbinding vote on executive pay packages. Consumers will also have free access to their credit scores, in some cases.

The effectiveness of this law will depend to some extent on the dedication and abilities of the personnel who will staff these new posts. But Congress and the president are putting in place a needed framework for tougher monitoring and regulation of a system that spun out of control.