Both Republicans and Democrats expect a bill to be approved eventually

Republicans in the US Senate have dropped their objection to a debate on the most significant reforms to financial regulations since the 1930s.

BBC News

Senate Banking Committee Chairman Christopher Dodd said Republicans would "at last allow debate on the bill to bring accountability to Wall Street".

Republicans had blocked action on the bill for three consecutive days.

The agreement came after Democrats threatened to hold an extraordinary all-night session in the Senate.

Republicans insisted they had won some crucial concessions from Democrats, including the elimination of a $50bn (£32.9bn) fund that would be used to help pay for dismantling big financial firms in distress.

President Barack Obama said he was "very pleased" the proposals would be debated, and that Americans must never again allow the financial practices that triggered the global economic crisis.

"The time for reform is now," he said in a speech in Illinois.

But he warned that he would oppose any legislation that he felt was too heavily influenced by lobbyists trying to protect Wall Street.

'Wide-ranging implications'

In an apparent victory for President Obama and his Democratic colleagues, Republican Senators said on Wednesday that they would no longer negotiate behind closed doors over the bill, and would try to change some of its provisions through open, formal discussion.

[I] will work aggressively in the days ahead to ensure that the majority does not use our mutual interest in regulating Wall Street to extend the federal government's unwanted hand into Main Street Sen Richard Shelby

"I believe we owed the American people our best effort to make whatever changes we could to this incredibly complex piece of legislation because it will have wide-ranging implications for our economy," Sen Richard Shelby, the senior Republican on the banking committee, said in a statement.

He added: "I remain deeply troubled by a number of provisions in this bill and will work aggressively in the days ahead to ensure that the majority does not use our mutual interest in regulating Wall Street to extend the federal government's unwanted hand into Main Street."

Sen Shelby said he had been assured that the Democrats would consider Republican amendments during the debate.

"It's time for this debate to begin," Sen Dodd said. "And it must be a serious, vigorous debate. It is time for the Senate to operate as the Senate should."

"Members must be allowed to offer amendments. We must allow many voices to be heard as we work to create a sound foundation for our nation's future economic strength," he added.

Wall Street has fiercely resisted President Obama's financial reforms

The BBC's Madeleine Morris in Washington says the two parties still have differences, such as over establishing a Consumer Financial Protection Bureau within the Federal Reserve that would have power to police transactions between institutions that provide financial services and their customers.

Sen Shelby said the "massive new bureaucracy would have unchecked authority to regulate whatever it wants, whenever it wants, however it wants".

The Republicans still control enough votes in the Senate to prevent any bill from being passed. The Democrats have 59 seats, one short of the number required to defeat a filibuster, a method used to delay or block the passage of legislation.

But our correspondent says there is widespread public support for tightening the regulation of Wall Street, and both sides expect a bill to be approved eventually.

It will be months, however, before a final vote is held, she adds.