The House of Representatives has approved a compromise on a bill to overhaul bank regulation, and the Senate is expected to act after a recess for the July 4 holiday.

The financial reform bill is partially the result of work by Virginia Sen. Mark Warner, who spent the better part of a year working on several financial issues, such as how to hold financial institutions more accountable, how to break up failing institutions slowly, rather than providing bailouts, and how to pay for increased regulation.

Warner was not on a conference committee of senators and congressmen who worked out final details between House and Senate versions of financial reform, said spokesman Kevin Hall. But, Hall said, Warner is "strongly inclined" to support the compromise.

"He's worked a year on it and is especially happy that the specific pieces that he had a leadership role in crafting are still in the bill," Hall said.

Virginia's other senator, Sen. Jim Webb, is also likely to vote for it, according to spokeswoman Jessica Smith.

"He is in favor of the concept overall and is in favor of more oversight over our financial markets," Smith said.

The bill passed in the House on a 237-192 vote, largely along partisan lines. Rep. Eric Cantor, R-7th, and Rep. Rob Wittman, R-1st, both voted against it.

The bill--which is more than 2,000 pages long--imposes some of the biggest changes to financial regulation since the Great Depression, and is a top priority for President Barack Obama. Its purpose is to prevent another big-bank failure like those that contributed to the recession, or at least mitigate the fallout to other banking institutions.

But some Republicans fear it gives government too much power over financial systems, at the expense of the free-market system, and that it could lead to more bailouts.

The lawmakers negotiating the compromise on the bill had to remove a provision, worth $19 billion, that imposed a tax on larger banks to help pay for the increased regulation, in an effort to win some wavering Republican votes in the Senate. The cost will instead be borne with leftover TARP money and increased FDIC fees on some financial institutions.

The bill gives government more oversight of financial institutions, creates new consumer credit protections, and allows the government to supervise liquidation of failing banks.

Also in the bill are increased regulations of debit swipe fees, the fees charged by credit card companies and banks whenever a customer uses plastic to pay for a purchase in a store.

Chelyen Davis: 540/368-5028
Email: cdavis@freelancestar.com