One Republican joined Democrats on the Senate Agriculture Committee to advance a measure that would introduce oversight to the unregulated $450 trillion (£292 trillion) derivatives market, the source of the worst financial turmoil in 70 years.
“If banks want to be banks, they can remain banks, but they’re going to need to spin off that activity,” committee chair Blanche Lincoln said after the vote.
The bill will likely become a part of a sweeping overhaul of financial regulation that is expected to reach the Senate floor potentially as soon as this week.
Lincoln shocked markets last week by proposing banks participating in the swaps market should give up protections like access to the Federal Reserve discount window – a potentially devastating blow which could force them to sell off their lucrative swaps trading desks.
The bill would also require most derivatives to trade on exchanges and pass through clearing houses.