The House passed legislation Wednesday that would penalize foreign businesses - including banks - that invest more than $40 million annually in Iranian and Libya oil and gas production.

The bill would require the President to impose two of three penalties applicable to financial firms: forbidding U.S. institutions from making loans of more than $10 million annual to sanctioned institutions, prohibiting violators from selling U.S. securities or being repositories of government funds, and banning purchases of goods or services from sanctioned institutions.

Early versions of the bill drew industry opposition because foreign banks that lend to violators would have become sanctioned themselves. Bankers argued the provision would threaten the massive U.S. market for short-term interbank loans.

The bill goes to the Senate next, where final passage could be stalled by Sen. Edward Kennedy, D-Mass., who wants to toughen the penalties against Libya.

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