After months of negotiations and lobbying, the financial reform bill, which as of Friday seemed set to pass within days, has been dealt another drawback: the death of Sen. Robert Byrd (D, W.Va.). Byrd had been expected to vote in favor of the financial reform bill, and without him, Senate Democrats might not have enough votes to pass it.

Congress is still expected to vote on the financial reform bill this week, and if it passes President Obama could sign it into law by July 4. Regardless of the vote s outcome, some critics say the bill could leave banks more loosely regulated and with wider profit margins than originally expected.

Although the latest version of the bill would require big banks to spin off their riskiest derivatives operations, they would be able to hold on to interest rate, foreign exchange and some commodity swaps. The compromises on the way to passing the bill weaken it considerably, wrote Peter Cohan, president of Peter S. Cohan & Associates, a management consulting and venture capital firm, in a report. There is very little change to how banks can use derivatives. He added that the bill in its current state would fail to prevent more financial meltdowns.

Cohan says the bill also features a weakened version of the Volcker rule, which would offer banks up to two years to reduce their proprietary trading and investments in hedge funds and private-equity funds.

Others say the broader system could benefit from changing the derivatives rules at a slower pace. It s better to put more measured controls in place and take wait-and-see approach than to do too much too soon, says Bruce McCain, chief investment strategist at Key Private Bank.

Some analysts say banks profits still could be hampered because they will have to boost their capital requirements.

For bank shareholders, the damage to stock prices could be lighter than anticipated. Should the bill pass, it appears less likely to threaten to their profits significantly. And either way, the result will eliminate some of the uncertainty that s been weighing on bank shares.