WASHINGTON - Treasury Department aides were negotiating Monday with congressional Republicans and representatives of the Securities and Exchange Commission and the Commodity Futures Trading Commission on draft legislation to protect banking products - particularly swaps contracts - from regulation by the nonbank regulators.

Senate Banking Committee Chairman Phil Gramm on Thursday proposed an amendment to the Gramm-Leach-Bliley Act that would explicitly bar the futures commission from regulating bank products as currently defined by the financial reform law. The proposal would also require the agency to seek permission from the Federal Reserve Board to regulate "any new banking product."

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