US lawmakers were close to finalizing a historic overhaul of financial regulations after hammering out agreements on the most contentious sticking points of the bill.
As a marathon negotiating session passed the 19-hour mark, Democrats agreed to a compromise that would allow banks to retain the bulk of their lucrative swaps-dealing operations, resolving a standoff that had threatened to scuttle the entire effort.
They had earlier agreed on a separate measure that would limit banks' risky trading activities, with some exceptions.
With the most controversial aspects resolved, lawmakers looked certain to finish a final version of the most sweeping rewrite of the Wall Street rulebook since the 1930s. The bill would boost consumer protection, tighten financial regulations and reduce the industry's profits by billions of dollars.
Democrats face enormous pressure to complete work on the bill in the coming hours, before Mr Obama discusses recovery and reform with leaders of other economic powers at the Group of 20 meeting in Canada.
The crackdown aims to tame the $615 trillion derivatives market by forcing much trading activity onto exchanges and clearinghouses. Over-the-counter derivatives worsened the financial crisis and led to a $182 billion taxpayer bailout of insurance giant AIG.
Wall Street lobbyists have been unable to kill the overhaul as Democrats ride a wave of public disgust at bank bailouts and bonuses. But Democrats have to balance their desire to crack down on Wall Street with the need to retain the votes of moderates from both parties.
Democrats hope Obama can sign the reforms into law by July 4th but the final package must first win approval in the House and Senate.
On Wall Street, the prospect of tough new rules sent US bank stocks lower, helping to pull down the overall market. The KBW banks index closed down 2.2 per cent.
Banks would have five years to meet the rules, which force them to exclude some riskier securities from core capital. Banks with less than $15 billion in assets would be exempt.
On other issues, the panel agreed to let regulators set higher standards of duty for broker-dealers who give financial advice and agreed to give investors an easier way to nominate corporate board directors.
They also watered down a provision to give shareholders a nonbinding vote on executive pay. That vote would take place once every two or three years, not annually.
Reuters