It’s been talked about for months now, but today the deal was finally reached by negotiators early this morning. The negotiation wasn’t easy and it ended up lasting through much of the night, but lawmakers finally came to a compromise and now the United States Bank Financial Reform Bill is ready to go to a vote in both the House and the Senate.

There is much debate in Washington as to whether this move was the right one to make, with democrats saying it will avert another financial disaster and republicans saying it will slow down the economy in the long run. The only thing that is definitely true at this point is that the landscape is about to change for banks in the United States. The financial industry as a whole is about go through the biggest changes in many years.

There is a delicate balance that needs to be reached where economic expansion can continue without too much regulation, but some regulation needs to be in place in order to keep Wall Street and the banks under control. Derivatives trading will be watered down quite a bit, which is probably a good thing for the safety of the economy. Many lawmakers said that the goal of the bill is to regulate areas where banks and investment firms have found that there was no regulation. These areas were used to run up record profits, but when these markets collapsed, we ended with firms that were “too big to fail.”

In the short-term it is hard to say how this will affect the stock market in the United States. It’s quite unclear as to how this will change the business of some financial firms, but the certainty that a reform bill is now set should help the overall trading pattern in financial stocks. The true test of this bill will be in the long run, when we determine whether or not adequate steps were taken to keep us out of another credit crisis like we saw two years ago.

Democratic senator Chris Dodd unveiled a bill today that is 1,136 pages long and proposes several sweeping changes in the financial regulatory system. The bill would include adding a consolidated bank regulator, which would combine all federal bank overseers. Dodd believes this would stop banks from searching for a regulator with the lowest standards and keep an even playing field for the entire industry. In addition to this the Dodd bill would remove the Federal Reserve’s oversight responsibility. In the bill the words are “The Federal Reserve will focus on monetary policy without being distracted by responsibilities for bank oversight and consumer protection.” The third important addition this bill would bring is a Consumer Financial Protection Agency. The agency would write rules for mortgage and credit-card products that would be offered to consumers.

The bill is definitely going to have some strong opposition from republicans and probably even some moderate democrats in the senate. The creation of a consolidated bank regulator may be the most controversial part of this bill, while the Consumer Financial Protection Agency seems to be the most popular part of the bill because it should help keep the credit rating agencies honest.

One has to wonder if anyone will ever actually read the entire 1,136 pages of this bill? Sure seems like a whole lot of reading for one bill. I think that the debate over moving forward with financial regulation that tried to help us avoid something like the credit crisis of last year is a positive one, but all steps should be taken to not overstep boundaries or block a group like the Federal Reserve from being able to make necessary moves to help consumers. What is clear is that the current financial regulatory system isn’t working. The part that isn’t clear just yet is exactly what the solution should be.