The U.S. House of Representatives passed on Friday the most sweeping financial regulatory overhaul in more than 70 years, a crucial step for one of the Obama administration's key reforms.

The legislation, passed by a vote of 223-202, was designed to address the shortfalls that led to the worst financial crisis since the Great Depression of 1930s.

Again, it is a victory of the Democratic-dominated Congress. No Republicans voted for the bill and 27 Democrats voted against it.

The bill expands the government's power to break up companies that threaten the economy, and creates a new Consumer Financial Protection Agency to oversee consumer banking transactions.

"House passage of this bill moves us an important step closer to meeting the president's objectives for reform." Treasury Secretary Tim Geither said in a statement after the vote.

"Comprehensive reform must establish clear rules of the road with strong enforcement for our nation's financial institutions and markets; end loopholes that allowed big Wall Street firms to escape supervision; make it clear that no firm is 'too big to fail ', and provide strong consumer and investor protections for American families," Geithner said.

"As with any legislation of this scale and complexity, the administration looks forward to continuing its close work with Congress to strengthen key provisions as the legislation moves toward final passage," he said.

Since the U.S. Treasury Department proposed its financial regulatory overhaul to the Congress in June, when the U.S. economy was still in deep recession, key players of the reform, including high rank officials of the government, lawmakers, existing financial regulators and powers from the banking system, have frequently made remarks on the issue.

The creation of the Consumer Financial Protection Agency was vigorously opposed by big banks and the U.S. Chamber of Commerce. They argue that the new agency will not only depress the financial institutions, but also hurt consumers benefits. Banking regulators, such as the Federal Reserve argue that the agency would strip consumer protection powers from the central bank.

Barney Frank, chairman of the Financial Service Committee of the House, led the Congress in establishing the new agency and paved the way for the bill.

The legislative activity now moves to the Senate, which is not expected to act on a regulation bill until early next year.

Senator Christopher Dodd, who chairs the Senate Banking Committee, proposed his own bill draft in November. His plan differentiates the House's bill.

There are a number of differences between the House and Senate versions. However, the key point is that Dodd's plan is more hawkish on banking regulators.

The House would distribute supervisory powers among the Federal Reserve (Fed), the Federal Deposit Insurance Corporation (FDIC) and the Office of the Comptroller of the Currency (OCC). The Senate calls for the creation of one main federal regulator, reasoning that a single regulator would end "regulator shopping" -- whereby banks choose their own overseer, invariably opting for the weakest one.

It is expected that there will be hot debate in the Senate after the House' floor vote.

"We all agree that there are fundamental flaws in the American financial institutions." Harry Harding, public policy professor of Virginia University, told Xinhua in a recent interview. "Until now, we still don't quite know how to deal with that. How it should be regulated. This is going to be a very significant debate."