Senate closes in on final Wall St reform vote

By Kevin Drawbaugh and Andy Sullivan

WASHINGTON (BestGrowthStock) – The Senate moved on Monday to wrap up debate on the biggest overhaul of financial regulation since the 1930s, with a final vote on passage targeted in just a few days.

However, with major disputes unresolved on regulating over-the-counter derivatives and curbing risky trading by banks, as well as on the power of state bank regulators, debate might spill into next week.

Behind closed doors, banks were pushing hard to weaken parts of the bill that would pinch their profits from over-the-counter derivatives, such as credit default swaps, and curb trading for their own books unrelated to their customers.

These provisions have the potential to weigh heavily on earnings at Wall Street giants such as Goldman Sachs and Morgan Stanley, as well as big banks like JPMorgan Chase and Bank of America, analysts said.

A more fundamental impact, possibly forcing restructuring, could result from a provision that would force banks to split swap-trading desks from their core businesses. Analysts expected that this part of the bill, drafted by Democratic Senator Blanche Lincoln, would be dropped.

The Senate was expected to vote later in the week on a measure that would allow states to limit credit-card interest rates, spelling more risk for large banks after the Senate voted to limit the fees they charge merchants on debit-card transactions.

The Democratic leader, Senator Harry Reid, filed a motion to set up a procedural vote that would limit debate and set up a final vote to pass the bill.

Debate resumed on Capitol Hill hours after union-organized demonstrations were staged against “Wall Street and corporate interest lobbying” on Washington’s K Street, which is home to many corporate law and lobbying firms.

OPPOSE RISKY IMF BAILOUTS

The Senate voted 94 to 0 to require the U.S. government to oppose International Monetary Fund bailout packages for countries that are not likely to repay them, addressing concern that the United States is indirectly supporting a $40 billion IMF package for Greece as it struggles to rein in its debt.

The Senate also approved, by a voice vote, a bipartisan amendment aimed at preventing the wider bill from impeding venture capital funding.

Venture capital firms put seed money into small, start-up companies. The amendment changed the bill so that it would not delay and limit the availability of such capital, aides said.

Separately, the European Parliament on Monday approved tighter controls on hedge funds and private equity firms, advancing a parallel regulatory effort in Europe.

The Senate bill would require hedge funds to register with the U.S. Securities and Exchange Commission, but it would exempt venture capital funds and private equity funds.

White House spokesman Robert Gibbs said on Monday the administration expects to have a financial regulation bill for President Barack Obama to sign into law soon.

“I think there is some reason to believe that the Senate will conclude its business this week,” Gibbs told reporters.

“Obviously, the next steps will be working though those differences with the House and I think we will have a bill to the president’s desk somewhat shortly,” he said.

The House of Representatives approved a Wall Street reform bill in December that embraced many of the reform proposals put forward in mid-2009 by Obama in an effort to prevent a recurrence of the devastating 2007-2009 financial crisis.

The Senate bill also will need to be merged with the House version before a final package can go to Obama.

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(Additional reporting by Andy Sullivan, Thomas Ferraro and Caren Bohan; Editing by Leslie Adler, Andrew Hay, Gary Hill)

Senate closes in on final Wall St reform vote