Stacy Kaper

After a heated debate, the regulatory reform conference committee agreed late Thursday to scale back a provision of the bill that would eliminate the use of trust-preferred securities as Tier 1 capital.

Regulatory reform conferees tussled Wednesday over provisions that would allow the Government Accountability Office more power to audit the Federal Reserve Board, give shareholders a nonbinding vote on compensation and strengthen investor protections.

The regulatory reform conference committee officially kicked off Thursday, and while the final fate of key provisions remains up in the air, it is clear senators have several advantages over their House counterparts.

Senate Banking Committee Chairman Chris Dodd on Wednesday endorsed a proposal to force banks to spin off their derivatives desks, saying Sen. Blanche Lincoln's primary win this week had increased odds some form of it would be in the final regulatory reform bill.

Interviews with analysts, industry representatives, academics and other sources point to a growing consensus on how some of these issues will play out.

Senate Democrats tapped mostly liberal members Tuesday to be conferees on the regulatory reform bill, making it harder for the banking industry to remove provisions it considers too tough.

Senate Banking Committee Chairman Chris Dodd took to the floor Thursday to beg his colleagues on both sides of the aisle to stop adding more amendments, warning the process is in danger of spinning out of control.

After years of trying, Sen. Richard Durbin, D-Ill., finally succeeded Thursday in passing a measure that would restrict interchange fees.

While Senate leaders said they would like to complete a vote on regulatory reform legislation this week, that goal is looking increasingly unrealistic.

Even as top Senate Banking Committee leaders appear close to striking a final compromise on a regulatory reform bill, some Democrats continue to try and push the legislation further to the left.