WASHINGTON — Congressional Democrats inched toward a compromise late last night after a knock-down, drag-out fight within the party over how to crack down on Wall Street.
Negotiators offered up a deal around midnight that would ease the proposed ban on banks trading in lucrative derivatives, which are complex securities used to hedge against market fluctuation or as speculative financial instruments.
It would force banks to spin off some of their derivatives business, but allow them to keep trading derivatives based on interest rates, gold and silver and other approved investments.
But they would be barred from trading some of the riskiest types of these complicated instruments — like those based on mortgages that nearly brought down the financial system.
Some New York lawmakers still were not satisfied.
“I’m not happy with this because it makes some arbitrary distinctions which I’m concerned will still be harmful to New York financial institutions,” said Mike McMahon (D-SI).
The deal still faced a series of amendments and counter-offers as negotiators haggled early into the morning to finish the historic overhaul of financial regulations.
The compromise was reached after New York Democrats teamed up with dozens of moderate House Dems in a bid to nix a complete ban, which would hammer New York’s big banks and rob the city of jobs and tax revenue.
The pols met fierce resistance from the legislation author Sen. Blanche Lincoln (D-Ark.) and more liberal Democratic leaders.
The fight over derivatives was one of the final sticking points for Dems who want to pass Wall Street reforms before July 4.