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US House of Representatives backs financial reform bill

US President Barack Obama
President Obama welcomed the passing of the bill

The US House of Representatives has approved the most sweeping changes to the country's financial sector since the Great Depression of the 1930s.

The 223 to 202 vote is a victory for President Obama who has made financial reform one of his main goals.

The bill aims to create a new agency to monitor consumer banking transactions and give the government powers to break up companies that threaten the economy.

The US Senate will have to pass the bill before the president can sign it.

The legislation would give regulators the power to dismantle the companies in a way which ensures shareholders and unsecured creditors, not taxpayers, bear the losses.

It also hopes to strengthen the powers of the Securities and Exchange Commission to detect irregularities that could provide an early warning of fraudulent investment schemes.

Plans to regulate the vast $600 trillion market in products called derivatives are also included.

The Federal Reserve would be given powers to oversee large firms at risk of collapse.

The Government Accountability Office, the investigative arm of the US Congress, would also be given more power over the Federal Reserve.

President Obama welcomed the outcome of the vote, calling it "another important step closer to necessary, comprehensive financial reform that will create a more stable financial system."

He called on the Senate to pass the legislation as quickly as possible.

The president has blamed Wall Street and government failures for the financial crisis.

He said reforms should promote sound investment, encourage competition and innovation and prevent a crisis from recurring.

All of the chamber's Republicans along with 27 Democrats voted against the bill.



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