WASHINGTON - Bankers are calling expanded merchant banking authority the hidden gem in the new financial reform law, but they are also raising concerns that federal regulators could dull its shine with overly restrictive regulations.

The Federal Reserve Board and the Treasury Department are crafting a rule that agency officials said will be issued before March 13, the first business day that banks, securities firms, and insurance companies may begin freely merging with each other under the Gramm-Leach-Bliley Act.

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