House, Senate Lawmakers Reach Deal On Bank Bill The sweeping overhaul of Wall Street rules forged in the aftermath of a financial crisis cleared congressional negotiations early Friday and headed to the House and Senate for final votes. Lawmakers hope to have a bill on President Obama's desk by July 4.

House, Senate Lawmakers Reach Deal On Bank Bill

President Obama, speaking to members of the media Friday on the South Lawn of the White House, said he was "gratified" for Congress' work and said the deal included 90 percent of what he had proposed. Pablo Martinez Monsivais/AP hide caption

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Pablo Martinez Monsivais/AP

President Obama, speaking to members of the media Friday on the South Lawn of the White House, said he was "gratified" for Congress' work and said the deal included 90 percent of what he had proposed.

Pablo Martinez Monsivais/AP

House Financial Services Committee Chairman Rep. Barney Frank (left) and Senate Banking Committee Chairman Sen. Christopher Dodd speak to the media about the financial services legislation in May. Susan Walsh/AP hide caption

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Susan Walsh/AP

House Financial Services Committee Chairman Rep. Barney Frank (left) and Senate Banking Committee Chairman Sen. Christopher Dodd speak to the media about the financial services legislation in May.

Susan Walsh/AP

Almost two years after one of the worst economic crashes in American history, the House and Senate on Friday reached a dawn agreement on the bill to put tighter controls on Wall Street.

Lawmakers shook hands on the compromise legislation at 5:39 a.m. after Obama administration officials helped broker a deal that cracked the last impediment to the bill -- a proposal to force banks to spin off their lucrative derivatives trading business. The legislation touches on an exhaustive range of financial transactions, from a debit card swipe at a supermarket to the most complex securities deals cut in downtown Manhattan.

President Obama had pushed hard for the measure, and just before leaving for an international economic summit in Canada on Friday, he congratulated lawmakers on their work.

"Over the last 17 months, we passed an economic Recovery Act, health insurance reform, education reform -- and we are now on the brink of passing Wall Street reform," he said.

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The effort gives Obama a sign of progress to bring to the Group of 20 meeting of world leaders in Toronto this weekend. The president said he was "gratified" for Congress' work, calling it the biggest financial overhaul since the Great Depression and saying it contained 90 percent of what he had proposed.

Now the House and Senate need to vote on the package, and Obama hopes to sign the bill into law by the Fourth of July. As he walked away from the microphone Friday, a reporter shouted, "Can you get it through the Senate?" Obama responded, "You bet."

The measure was forged in the aftermath of the 2008 financial meltdown, and supporters said it would help avoid a future one. Looking back on the beginning of his presidency, Obama said he headed to his first world economic summit with the nation in the worst financial crisis of its time; now he heads to the G-20 meeting poised to enact safeguards that he said will protect consumers from the kinds of financial tricks that led to the economic downturn in the first place -- though Republicans complained that the bill overreached and tackled issues that were not responsible for the crisis.

Obama said he will discuss the regulations with other leaders at the Toronto meeting because the recent economic crisis proves that the world's economies are linked.

Warning System, Protection Agency, New Rules

The bill would set up a warning system for financial risks, created a powerful consumer financial protection bureau to police lending, forced large failing firms to liquidate and set new rules for financial instruments that have been largely unregulated.

"It took a crisis to bring us to the point where we could actually get this job done," Senate Banking Committee Chairman Christopher Dodd said.

In its breadth, the legislation would affect working class homebuyers negotiating their first mortgage as well as international finance ministers negotiating international regulatory regimes.

The bill came together in during a time of high unemployment for American workers, huge bonuses for bankers and rising antipathy toward bank bailouts.

"It is reassuring to know that when public opinion gets engaged it will win," said Rep. Barney Frank, the chairman of the House-Senate panel that merged House and Senate bills into one piece of legislation.

House negotiators voted a party line 20-11 in favor of the final agreement; senators voted 7-5, also along party lines.

Frank and Dodd set a furious pace for lawmakers in their last day of talks, pushing them into the late hours to resolve the most nettlesome differences between the House and Senate.

Their goal, in part, was to equip Obama with a legislative agreement as he meets with leaders of the Group of 20.

"Congress has shown that America is ready to lead by example," Treasury Secretary Timothy Geithner said.

Shortly after 5 a.m., Rep. Paul Kanjorski (D-PA) moved to officially name the legislation the Dodd-Frank bill. Dodd, who will retire at the end of this term, jokingly objected before lawmakers voted unanimously in favor. Aides and administration officials broke into applause.

While the legislation addressed the causes of the last meltdown -- and more -- it left for later any restructuring of the government-related mortgage giants Fannie Mae and Freddie Mac. Time and again, Republicans tried to shift the debate to the mortgage purchasing firms, to no avail.

Overhauling those agencies "should have been our top priority" in writing the compromise bill, Rep. Spencer Bachus (R-AL), top Republican on the House Financial Services Committee, said in a statement before the deal was completed. He said the bill focused on other areas, "many that are unrelated to the financial crisis."

The government took over Fannie and Freddie in 2008 after they suffered heavy loan losses in the housing crash. Their collapse has cost $145 billion and the Obama administration has pledged to cover unlimited Fannie and Freddie losses through 2012, lifting an earlier cap of $400 billion.

Resolving Differences

While many tough provisions in the bill survived, securing the votes of moderate Democrats in the House and a handful of Republicans in the Senate meant softening some provisions in the bill.

Under the bill, banks could lose billions in lucrative trading business, though negotiators blunted some of the harsher measures under consideration.

In a blow to Obama, the consumer protection agency would not regulate auto dealers, even though they assemble loans for millions of car buyers. Payday lenders and check cashers would be regulated, but enforcement would be left to states or the Federal Trade Commission.

To pay for the costs of the bill, negotiators agreed to assess a fee on banks with assets of more than $50 billion and hedge funds of more than $10 billion in assets to raise $19 billion over 10 years.

The House-Senate panel numbered 43 total negotiators, though not all attended at all times.

The final agreement capped an all-night marathon session of public and private deal making. House Speaker Nancy Pelosi stepped in to press agreement on one of the final obstacles.

As they worked toward the home stretch early Friday, negotiators softened a contentious Wall Street restriction that would force large bank holding companies to spin off their lucrative derivatives business.

The deal, negotiated between the White House and Sen. Blanche Lincoln (D-AR), eliminated one of the last major sticking points. Congressional leaders were eager to wrap the bill up, with hopes of getting final House and Senate passage next week.

Derivatives are complex securities often used by corporations to hedge against market fluctuations. But they also have become speculative instruments for financial institutions, the most notorious of which were credit default swaps that hedged against loan failures.

In the House, moderate Democrats and members of the New York congressional delegation fought to remove Lincoln's language.

Under the agreement banks would only spin off their riskiest derivatives trades. Banks get to keep some of their lucrative business based on trades in derivatives related to interest rates, foreign changes, gold and silver. They could even arrange credit default swaps, the notorious instruments blamed for the meltdown, as long as they were traded through clearing houses. Banks also would be allowed to trade in derivatives with their own money to hedge against market fluctuations.

Negotiators also limited the ability of banks to carry out their own high-risk trades or invest in hedge funds and private equity funds.

Bank holding companies that have commercial banking operations would not be permitted to trade in speculative investments. But negotiators agreed to let bank holding companies invest in hedge funds and private equity funds, setting an investment limit of no more than 3 percent of their capital. There are no such conditions on banks now.

NPR's Ari Shapiro and John Ydstie contributed to this report.