The House Ways and Means Committee approved a bill that would penalize foreign businesses - including banks - that invest more than $40 million annually in Iranian or Libyan oil and gas firms.

To the relief of executives at big U.S. banks, the legislation was revised to reduce its threat to the massive U.S. market for short-term interbank loans.

The new version would expand the number of penalties the President can impose. Under the bill, the President would have to pick two of three possible penalties applicable to financial firms: forbidding U.S. institutions from making loans of more than $10 million yearly 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.

Previous versions included only the first two options and bankers argued that foreign banks would be forced out of the U.S. if the president cut off interbank lending.

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