Tax concerns jeopardise US financial reform effort

Members of Congress are revising an agreement on reform of the US financial sector after Republicans objected to a tax on large financial institutions.

After a marathon 19-hour negotiating session by House and Senate legislators on Thursday, Democrats were confident their bill would pass both chambers.

But Republican Senator Scott Brown now says he will withdraw his support if his concerns over the tax are not met.

The bill would bring the biggest change to financial regulation in decades.

The reforms are intended to impose strict limits on banks’ ability to take risky speculative bets on markets.

The legislation had been expected to pass both chambers of Congress this week in time for President Barack Obama to sign it into law by 4 July.

But without Mr Brown, Democrats have no Republican votes for the package in the Senate – and with the death of Senator Robert Byrd on Monday, they are two votes shy of the 60 required for passage.

Mr Brown said on Tuesday he would no longer back the bill if his concerns over the $17.9bn (£11.9bn) tax on large financial institutions were not addressed.

The tax, which helps finance the bill, was included during Thursday’s all-night negotiating session.

Senate Finance Committee Chairman Chris Dodd has said he is assessing alternatives to the tax.

One option under consideration is to put an early end to the Troubled Asset Relief Program (TARP) – often referred to as “the bank bailout” – to help offset the bill’s price tag.

White House spokesman Robert Gibbs told reporters on Tuesday that if the controversial tax was stripped from the bill, it could still be pursued as a separate piece of legislation.