By Kevin Drawbaugh and Andy Sullivan
WASHINGTON, May 20 (Reuters) - U.S. Senate Democrats on Thursday hunted for votes needed to advance the biggest overhaul of financial regulation since the 1930s, which was still widely expected to win final passage within days.
One of President Barack Obama's top domestic priorities, the bill stumbled over a procedural roadblock on Wednesday. The banking industry will benefit if the bill is approved sooner, rather than later, analysts said.
Most of the scores of possible amendments still under consideration would further threaten industry profits already under pressure from key elements of the legislation.
For instance, the Senate is expected to vote on an amendment to tighten the proposed 'Volcker rule' that would curb proprietary trading by banks using their own money.
The amendment from Democrats Jeff Merkley and Carl Levin could be approved, analysts said.
The Senate debate resumed as U.S. stocks fell sharply. The Dow Jones industrial average was off 2.3 percent as a Senate committee met to probe a stunning sell-off two weeks ago, still largely unexplained by market experts and regulators.
Democrats needed to find two more votes to advance the sweeping legislation. They fell short on Wednesday in a bid to wrap up debate on the bill which would tighten Wall Street rules to avoid a repeat of the 2007-2009 financial crisis.
Democratic Senator Arlen Specter, who missed Wednesday's vote after his primary election defeat in Pennsylvania, was expected to return to Washington and support the measure.
But Senate Democratic Leader Harry Reid still needed one more supporter in order to clear the 60-vote threshold needed to limit debate and move toward final passage.
HOUSE-SENATE CONFERENCE IN VIEW
Bank lobbyists who have worked for months to weaken the Senate bill were refocusing on prospects for watering it down in the conference that would follow Senate passage. The bill, if approved, would have to be merged in conference with one passed by the House of Representatives in December.
'We believe there is room to try to roll back some of this in a House-Senate conference. We just urge investors against assuming it will be fixed as it will be an uphill climb,' said Concept Capital analyst Jaret Seiberg.
Meanwhile, House Democrats were girding for a fight.
Democratic Representative Luis Gutierrez said the Senate 'needs to stop bending to the will of Wall Street bank lobbyists and stand firm on consumer protection.'
He said, 'As we move closer toward a House and Senate conference committee, there are some very important consumer and taxpayer protection issues that we want to highlight for renewed attention as we get a renewed bite at this apple.'
One dispute still unsettled concerned Democrat Senator Blanche Lincoln's proposal to force banks to separate swap trading desks from core operations.
Sheila Bair, chairman of the Federal Deposit Insurance Corp, said again on Thursday that there is a place for derivatives trading inside insured banks.
She said she hopes Congress will 'really think hard' about whether to move forward with proposals that could result in U.S. banks spinning off their swaps trading desks.
'It could increase, not decrease, risk,' Bair said.
BAIR BACKS COLLINS PROPOSAL
She reiterated her support for a proposal by Republican Senator Susan Collins that could force the largest banks to set aside billions of dollars in extra capital. The U.S. Treasury has expressed opposition to the Collins proposal.
Two Democrats withheld their support for wrapping up debate on the bill on Wednesday, saying the bill was not tough enough on Wall Street.
Senator Russ Feingold, one of the chamber's most liberal members, was not expected to change his position. But Reid and other Democrats hoped Senator Maria Cantwell would decide to support the bill after she was allowed to discuss her proposal to tighten derivatives regulation.
Republican Scott Brown also was viewed as a potential supporter. Brown had previously said he would support the bill, according to Democrats, but voted against it on Wednesday because it did not include certain unnamed provisions.
Senators Susan Collins and Olympia Snowe were the only Republicans to side with Democrats on Wednesday.
(For a Factbox on major U.S. financial regulation reform proposals, double-click on)
(Additional reporting by Karey Wutkowski and Thomas Ferraro) Keywords: FINANCIAL REGULATION/ (kevin.drawbaugh@thomsonreuters.com, +1 202 898 8390, +1 202 488 3459 (fax)) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
WASHINGTON, May 20 (Reuters) - U.S. Senate Democrats on Thursday hunted for votes needed to advance the biggest overhaul of financial regulation since the 1930s, which was still widely expected to win final passage within days.
One of President Barack Obama's top domestic priorities, the bill stumbled over a procedural roadblock on Wednesday. The banking industry will benefit if the bill is approved sooner, rather than later, analysts said.
Most of the scores of possible amendments still under consideration would further threaten industry profits already under pressure from key elements of the legislation.
For instance, the Senate is expected to vote on an amendment to tighten the proposed 'Volcker rule' that would curb proprietary trading by banks using their own money.
The amendment from Democrats Jeff Merkley and Carl Levin could be approved, analysts said.
The Senate debate resumed as U.S. stocks fell sharply. The Dow Jones industrial average was off 2.3 percent as a Senate committee met to probe a stunning sell-off two weeks ago, still largely unexplained by market experts and regulators.
Democrats needed to find two more votes to advance the sweeping legislation. They fell short on Wednesday in a bid to wrap up debate on the bill which would tighten Wall Street rules to avoid a repeat of the 2007-2009 financial crisis.
Democratic Senator Arlen Specter, who missed Wednesday's vote after his primary election defeat in Pennsylvania, was expected to return to Washington and support the measure.
But Senate Democratic Leader Harry Reid still needed one more supporter in order to clear the 60-vote threshold needed to limit debate and move toward final passage.
HOUSE-SENATE CONFERENCE IN VIEW
Bank lobbyists who have worked for months to weaken the Senate bill were refocusing on prospects for watering it down in the conference that would follow Senate passage. The bill, if approved, would have to be merged in conference with one passed by the House of Representatives in December.
'We believe there is room to try to roll back some of this in a House-Senate conference. We just urge investors against assuming it will be fixed as it will be an uphill climb,' said Concept Capital analyst Jaret Seiberg.
Meanwhile, House Democrats were girding for a fight.
Democratic Representative Luis Gutierrez said the Senate 'needs to stop bending to the will of Wall Street bank lobbyists and stand firm on consumer protection.'
He said, 'As we move closer toward a House and Senate conference committee, there are some very important consumer and taxpayer protection issues that we want to highlight for renewed attention as we get a renewed bite at this apple.'
One dispute still unsettled concerned Democrat Senator Blanche Lincoln's proposal to force banks to separate swap trading desks from core operations.
Sheila Bair, chairman of the Federal Deposit Insurance Corp, said again on Thursday that there is a place for derivatives trading inside insured banks.
She said she hopes Congress will 'really think hard' about whether to move forward with proposals that could result in U.S. banks spinning off their swaps trading desks.
'It could increase, not decrease, risk,' Bair said.
BAIR BACKS COLLINS PROPOSAL
She reiterated her support for a proposal by Republican Senator Susan Collins that could force the largest banks to set aside billions of dollars in extra capital. The U.S. Treasury has expressed opposition to the Collins proposal.
Two Democrats withheld their support for wrapping up debate on the bill on Wednesday, saying the bill was not tough enough on Wall Street.
Senator Russ Feingold, one of the chamber's most liberal members, was not expected to change his position. But Reid and other Democrats hoped Senator Maria Cantwell would decide to support the bill after she was allowed to discuss her proposal to tighten derivatives regulation.
Republican Scott Brown also was viewed as a potential supporter. Brown had previously said he would support the bill, according to Democrats, but voted against it on Wednesday because it did not include certain unnamed provisions.
Senators Susan Collins and Olympia Snowe were the only Republicans to side with Democrats on Wednesday.
(For a Factbox on major U.S. financial regulation reform proposals, double-click on)
(Additional reporting by Karey Wutkowski and Thomas Ferraro) Keywords: FINANCIAL REGULATION/ (kevin.drawbaugh@thomsonreuters.com, +1 202 898 8390, +1 202 488 3459 (fax)) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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