WASHINGTON, DC-Some three weeks after the House of Representatives and the Senate passed a conference committee bill overhauling the financial system, the Senate has officially signed off on it in a 60 to 39 vote. The past few weeks were touch-and-go for the bill with some Senators requiring additional lobbying and the uncertainty caused by the death of Sen. Robert C. Byrd in June. All that remains is the president’s signature. 

A landmark piece of legislation, the bill can be expected to touch upon almost all aspects of commercial real estate finance, from community bank lending and securitization to the use of derivatives by such companies as GE Capital, which at one time maintained an extensive real estate operation. 

Some of the provisions, such as the risk retention language for securities, are a welcome relief to the real estate industry, which at one point had been bracing for provisions viewed as far more detrimental. Essentially, the bill gives regulators choices such as a percent retention, flexible underwriting guidelines and controls and stronger representations and warranties.

However, the bill is so complex it is also widely understood that many of the ramifications might not be immediately apparent. Indeed, some of the effects will not be completely realized or understood until the appropriate regulations have been inked. 

There is also this: "It is not a uniformly positive bill for commercial borrowers--it is going to inhibit some aspects of lending," says W. P. Carey School of Business Professor Emeritus Herbert Kaufman.

The bill is moderately positive in general, says Kaufman, who consulted for the New York Stock Exchange, commercial banks, savings and loan associations, the US Treasury the World Bank and the Congressional Budget Office. "Much will depend on how the rules are drawn but I do think within the framework of the bill there is enough to prevent, or at least better deal with, a financial crisis before it comes to the stage we saw in 2008."