World Business

US lawmakers give nod to financial reforms

By Charles Abbott (China Daily)
Updated: 2010-06-26 14:02

WASHINGTON - US lawmakers hammered out a historic overhaul of financial regulations on Friday, handing President Barack Obama a major domestic policy victory on the eve of a global summit devoted to financial reform.

In a marathon session of more than 21 hours, legislators agreed to a rewrite of Wall Street rules that may crimp the industry's profits and subject it with tougher oversight and tighter restrictions.

To secure agreement, lawmakers reached deals in the final hours on the most controversial sections which restrict derivatives dealing by banks and curb their proprietary trading to shield taxpayer-backed deposits from more risky activities.

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But banks will be allowed to keep most swaps dealing activity in-house and will be permitted small investments in hedge funds and private equity funds.

The concessions that could lessen the impact on bank profitability and US stock futures were higher ahead of the market open, with Bank of America Corp stock up 2 percent.

The reform must still win final approval from both chambers of Congress before Obama can sign it into law, giving Wall Street one final chance to deploy its army of lobbyists on Capitol Hill.

Quick approval is expected and the reform could go to Obama for his signature by July 4.

Reuters