Not Losing is the New Winning for Bank Lobbyists

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Neither the House bill nor the Senate draft sets limits on pay or requires specific periods for deferring bonuses and holding stock, such as French President Nicolas Sarkozy demanded and Treasury's special pay master Kenneth Feinberg imposed on companies that needed exceptional government assistance.

Cram-Down Amendment

Another concession involved a provision that requires creditors and companies that package loans into securities to retain on their books as much as 10 percent of the credit risk on all loans. The measure, which the industry had argued would eliminate securitization, was amended to limit the industry's stake to 5 percent.

The House also rejected a mortgage "cram-down" amendment, opposed by banks and broker-dealers, that would have given federal judges the power to lengthen mortgage terms, cut interest rates and reduce loan balances for homeowners in bankruptcy court.

Some provisions of the House bill will hurt Wall Street, especially the biggest banks. They will have to pay a greater share of fees to the FDIC's deposit insurance fund, and banks with more than $50 billion in assets will be assessed charges to finance a separate $150 billion industry-supported fund to cover the failure of a large systemically important financial firm.

'Best Friends'

The industry argued that having firms pay into the fund before a collapse would tie up money that may never be used. Frank, who initially supported an Obama administration proposal to assess fees after a large firm failed, reversed course, saying waiting until after the fact would require going to the taxpayer first and then having the industry repay the government.

Another amendment opposed by Wall Street and approved by the House would force secured creditors to bear losses of as much as 20 percent to help cover the cost of unwinding a failed systemically important financial firm. Banks say the measure will increase borrowing costs and disrupt credit markets.

"We were their best friends when they needed TARP money to dig them out of the mess that they put themselves in," said Representative Luis Gutierrez, an Illinois Democrat and chairman of the House Subcommittee on Financial Institutions and Consumer Credit, who introduced the proposal for the $150 billion resolution fund. "The folks at Goldman Sachs are distributing billions of dollars. We made it possible. It's shameless that they should be using their profits to stop the American people through this legislative process."

To contact the reporters on this story: Alison Vekshin in Washington at avekshin@bloomberg.net; Michael J. Moore in New York at mmoore55@bloomberg.net.