President Barack Obama
Barack Obama has signed the financial reform bill into law.
The President went through a long battle to bring about the legislative changes, facing considerable Republican opposition to the plans, as well as from the financial services industry itself.
Under the new regulations that have been introduced, mortgage and consumer lending rules have been tightened and a new consumer protection agency is to be established.
Provisions have also been introduced to allow regulators to break up any firm which is deemed 'too big to fail' - a move intended to reduce the risk to the wider economy if another collapse of the banking system should occur.
President Obama expressed his delight that the fight to get the changes passed had finally been won, reports BBC News.
"Our financial system only works - our markets are only free - when there are clear rules and basic safeguards that prevent abuse, that check excess, that ensure that it is more profitable to play by the rules than to game the system," he stated.
"Because of this law, the American people will never again be asked to foot the bill for Wall Street's mistakes."
However, the bill has been criticized by Republicans for failing to address the root causes of the financial crisis and creating too much red tape for the private sector to deal with.
Last week, Senate Republican leader Mitch McConnell warned that the measures will create "vast and unaccountable bureaucracy" that will hold back businesses and therefore stifle economic growth and constrict credit.
Among the other measures included in the bill is a restriction on how much tier one capital banks can invest in private equity firms and hedge funds.
They will be allowed to put no more than three per cent of such capital into these investment vehicles.
Large banks will also be required to increase the amount of capital they hold, with this measure due to take effect in five years time so not to disrupt lending at the moment.
By Gary Cooper