US lawmakers raced to complete a year-long Wall Street reform effort on Thursday, as they battled over final rules aimed at preventing another global financial meltdown.
In a late-night session, members of the House of Representatives and the Senate clashed over the elusive final details of a compromise deal, which supporters want to put on President Barack Obama's desk next week.
More than two years after a financial crisis pushed the global economy to the brink, bleary-eyed Democrats -- with jackets slung aside and shirt-sleeves rolled up -- vowed to work through the night to reconcile House and Senate versions of the legislation.
Although both chambers would still have to hold a formal vote on the new deal, any agreement would hand Obama a major legislative victory as he leaves for a summit of the G8 and G20 in Ontario, Canada, where financial reform will be high on the agenda.
With much of the bill agreed -- including the outline of a powerful consumer financial protection bureau -- a deal still hinged on long-standing disputes over bank trading rules.
Agreement faltered over controversial measures that would limit government-insured banks' ability to invest for their own profit and from investing in derivatives -- speculative financial products that are credited with fueling the crisis.
Major differences remained between Democrats and Republicans -- who argued unilaterally adopting bank rules would put American firms at a "major disadvantage" to foreign competitors, according to representative Spencer Bachus.
"It's unilateral disarmament," he said, "it could be a disaster if we follow this road alone."
But under withering criticism from the left, which accuses Democrats of gutting reforms in order to reach for a deal, some held out for tougher measures.
Democratic Senator Blanche Lincoln has insisted that banks' derivatives desks be spun off into a separately capitalized entities, a move the sector argues would hit profitability.
According to analysts at Bank of America-Merrill Lynch, the reforms could lower the sector's profits by as much as 20 percent.
Much of the debate was also dominated by a feud between Republicans and Democrats over the future of government-backed mortgage lenders Fannie Mae and Freddie Mac.
Democrats insisted Fannie and Freddie will be the subject of separate reforms.
Obama fired the starting gun for reform a year ago, unveiling what were hailed as the most sweeping reforms in a generation.
Earlier on Thursday one of his administration's top economic advisors urged lawmakers to reach a deal.
"The finish line is in sight," Deputy Secretary Neal Wolin said in a blog post, adding an agreement would "lay a new foundation for a stronger, safer financial system."