One of the big questions about the conference committee that will reconcile the House and Senate versions of the financial reform bill is what will happen to the competing derivatives trading proposals. While both versions aim to push more OTC derivatives trading through clearinghouses, if not actual exchanges, there are some huge differences.

One in particular has Wall Street firms sweating. The Senate version, courtesy of Sen. Blanche Lincoln of Arkansas, would require that banks to spin off their derivatives trading units. The goal is to prevent putting depositors' money at risk. The House version does not require such spin offs, which is perhaps one reason why it has been criticized as being riddled with loopholes.

The guy who will oversee the conferencing is Rep. Barney Frank. He seems to favor the House approach right now, arguing that the Volcker rule (in the Senate version), which would require banks to split off proprietary trading units, might be a better route than the Senate approach. The bank lobby is up in arms. It has taken some lumps in this. If it can get rid of the Lincoln idea, they will have scored a victory.

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