A controversial amendment to a far-reaching bill to overhaul the U.S. financial system that would require secured creditors to take losses in the event of a bank failure may not survive in the final legislation.

The amendment is "generating a lot of controversy," House Financial Services Committee Chairman Barney Frank (D., Mass.) told Dow Jones Newswires Wednesday. He said he wouldn't be surprised to see "an effort to knock it out of the bill."

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