Congress Panel Reaches Bank Reform Deal - TheStreet

Congress Panel Reaches Bank Reform Deal

House and Senate negotiators completed early Friday an overhaul of banking regulations.
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WASHINGTON (

TheStreet

) -- House and Senate negotiators completed early Friday an overhaul of banking regulations.

Lawmakers hope to send the legislation, a priority of President Obama, to the president's desk by July 4.

The

Associated Press

reports the legislation sets up a warning system for financial risks and creates a consumer financial protection bureau to police lending. It forces large failing firms to liquidate and sets new rules for financial instruments that have been largely unregulated.

A vote on the final bill from the House and Senate is expected next week.

According to the

Financial Times

, lawmakers will force banks to

spin off their swaps desks

but have made significant concessions to Wall Street.

The members of Congress also voted to impose a tough proprietary trading ban on deposit-taking banks, new conflict of interest rules and a surprise $19 billion levy on the industry.

But, the newspaper reports, a ban on banks investing in hedge funds was relaxed to allow them to invest up to 3% of their tier one capital. An earlier proposal allowed 2% of tangible common equity -- a difference worth billions to the biggest banks.

-- Written by Joseph Woelfel in New York.

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