Updated for additional information, fresh stock quotes.

NEW YORK (

TheStreet

) -- The Senate and House of Representatives conference committee have agreed to amend financial reform legislation to remove a proposed $19 billion tax on the largest banks and end the Troubled Assets Relief Program, or TARP, three months early, according to multiple media reports.

Following objections from Senators Scott Brown (R-Mass.) and Chuck Grassley (R-Iowa) about the bill's requirement for the Federal Deposit Insurance Corp. to collect $19 billion from banks with more than $50 billion in total assets, the committee agreed late Tuesday to remove that special tax and partially make up the shortfall by reallocating an expected $11 billion that will be saved by ending the TARP program as of June 25.

TARP began in October 2008, when nine large banks were instructed by regulators to accept government bailout funds. The largest banks receiving aid included

Bank of America

(BAC) - Get Report

and

Citigroup

(C) - Get Report

, which each issued $45 billion in preferred shares to the Treasury in exchange for bailout money, and

Wells Fargo

(WFC) - Get Report

and

JPMorgan Chase

(JPM) - Get Report

, which each received $25 billion.

All four have fully redeemed preferred shares issued to the government in return for bailout money, with the exception of Citigroup, which had $25 billion of preferred shares converted to common stock, and repaid the government the remaining $20 billion. The Treasury is in the midst of selling its stake in Citigroup's common shares.

The support of Senators Brown and Grassley for the Restoring American Financial Stability Act of 2010 was considered crucial, as they were two of only four Republicans to support the Senate version of the bill.

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Further steps taken to make up for the shortfall from the "lost" $19 billion in taxes on large banks include raising FDIC deposit insurance premiums on banks with more than $10 billion in assets.

The committee also agreed to require the FDIC to increase its ratio of reserves to total industry deposits to 1.35% from 1.15%, in a move supported by FDIC Chairman Sheila Bair.

A person familiar with the conference committee's discussions told

TheStreet

that it appeared the new Oversight Council for Systemic Risk would impose risk-based assessments on all financial companies, not just banks. Bank holding companies like

Goldman Sachs

(GS) - Get Report

and

Morgan Stanley

(MS) - Get Report

that also serve as broker-dealers would also face increased assessments. "The larger and more complex the entity, the higher potential for systemic risk, the more regulation and special assessments they will pay," this source said.

According to the media reports, Senate Banking Committee Chairman Chris Dodd (D-Conn.) said he believed the modified bill would now have 60 votes in the Senate, although he also said "obviously, until they actually cast the vote you never know."

The big bank stocks got hit hard along with the broad market on Tuesday but the group was mixed in midday action on Wednesday. Of those gaining ground, Citigroup was up nearly 3% to $3.83; JPMorgan shares were adding 12 cents to $37.18; and Wells Fargo's stock rose 20 cents to $26.13. On the downside, Goldman Sachs was off 1.1% to $132.29; and Bank of America was down 3 cents to $14.54. The

KBW Bank index

was up 21 cents to $47.05.

--

Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.