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) -- If Wall Street had become a high-flying Las Vegas casino -- as several lawmakers recently put it -- it's about to become a little old lady buying lottery tickets.

It took more than 20 hours of wrangling after many more weeks of bickering, but finreg finally passed around 6 a.m. ET on Friday. Some of the harshest elements against big banks were watered down just enough to get a coalition of Wall Street-friendly representatives from New York to pledge their support.

But, overall, the Restoring American Financial Stability Act of 2010 is much harder on big banks than anyone had suspected at the start.

In a note sent to clients just a couple of hours after the bill was finalized, FBR analysts sounded cautiously optimistic. They said finreg was "tougher than hoped for, but not as bad as it looks," but made it clear that the game has changed for banks and for anyone attempting to value their stocks.

"Although the conference committee avoided adopting the worst-case scenario, the impact of this legislation remains difficult to quantify," the analysts wrote.

They expect "short-term relief" for financial stocks, now that the uncertainty of what would be in or out of finreg was removed. However, they remained "cautious" about longer-term implications on stock prices.

Among the more surprising wins for the anti-Wall Street crowd was

passage of the Volcker rule

. Named after former Fed chief Paul Volcker, the provision will effectively reinstate the Glass-Steagall Act enacted after the Great Depression -- something that seemed unthinkable just a few months ago.

The provision will disallow big banks from proprietary trading, or making bets with deposits and other liquid assets for their own profit. As a concession, banks will be allowed to own small stakes in hedge funds and private equity shops, since they can't make such investments on their own.

Video: 3 Bank Stock Bargains >>

Another controversial measure regarding derivatives went through as well. The new rule, authored by

Sen. Blanche Lincoln

, will force banks to house riskier derivatives trading in new, freshly capitalized entities, or simply spin them off.

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As a result, there will be no more trading of commodity derivatives or the highly complex vehicles that nearly brought down the financial system at any of the top Wall Street firms. This should have a huge impact on the five big banks that handle 97% of derivatives trading in the United States:

JPMorgan Chase

(JPM) - Get JPMorgan Chase & Co. Report



(C) - Get Citigroup Inc. Report


Bank of America

(BAC) - Get Bank of America Corp Report


Goldman Sachs

(GS) - Get Goldman Sachs Group, Inc. Report


Morgan Stanley

(MS) - Get Morgan Stanley Report


However, hardline Democrats allowed the rule to be modified from its original form so that banks will still be able to trade derivatives that hedge against inherent business risks, like interest-rate swaps and other, simpler credit deals.

In another dig against the ways of Wall Street, another rule attempted to address the

so-called "sh*tty deal"s

that were prevalent just before the bubble collapsed. Congress gave the Securities and Exchange Commission the power to ensure that broker-dealers consider clients' best interest when offering products, rather than hard-selling at any cost.

Among other odds and ends: A controversial measure regarding

capital standards

passed, but will allow banks a five-year phase in to prepare; in an effort to improve underwriting standards, a new rule requires that lenders keep at least 5% of any mortgages they securitize; the consumer protection agency will not only exist, but was granted oversight on even more items; and the

so-called bank tax provision

also passed.

That rule will force large institutions to pay into a liquidation fund in case they fall apart. However, it did not include some proposed language that sent shivers through Wall Street on Thursday, which would have made the industry responsible for the



Fannie Mae



Freddie Mac



Those giant, zombie entities were barely mentioned in the reform bill and will probably be the next uphill battle for the Obama administration in regards to financial reform.

At the start of the finreg overhaul, it wasn't clear that Sen. Chris Dodd would be

successful in passing

the sweeping reform plan he engineered. But Dodd's initial version pales in comparison to the bill that Congress ultimately approved.

"This is a tough law that will also have profound affects on the operations and cost structure of most financial services companies and financial markets," acknowledged Tim Ryan, head of SIFMA, a securities industry trade group.

Tense hearings about everything from Goldman fraud charges to rating-agency conflicts to continued dislocation in the housing market, over three years since weaknesses first emerged, seem to have shifted the tide of congressional sentiment.

Main Street advocates

-- whose views only hardened as the debate dragged on -- kept reminding lawmakers that votes will count more than lobbying dollars during tough midterm election battles this fall.

And so, by early June it became clear that

the end of Wall Street

was nigh, and on Friday morning, that view was solidified. Farewell predatory lending, farewell taxpayer bailouts, farewell sh*tty deal.

-- Written by Lauren Tara LaCapra in New York


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