The US wealth management industry will be keeping a wary eye on Congress this week to see if the ruling Democratic Party in the Senate can finally approve sweeping financial regulations on how banks do business.

After taking a break for a week, lawmakers return to Washington DC to take up the legislation. However, as reported by Reuters, Senate majority leader Harry Reid has yet to secure the 60 votes he needs to clear a procedural line in the 100-seat chamber.

The House of Representatives has already approved a final version of the bill. The legislation includes measures to force banks to spin off their money-spinning swaps dealing activities and derivatives arms into separately capitalized institutions and curb the amount of money banks can put into hedge funds and private equity. The idea of preventing banks from such proprietary activity is to prevent, lawmakers hope, a repeat of the sort of risk-taking associated with the recent financial crisis.

However, the legislation has been softened, as banks can still make some investments into hedge funds and private equity, for example. The bill also includes new scrutiny of consumer loans from a new authority.

So far, the impact on wealth management is likely to be muted, as far as this publication has been able to judge in talking to analysts. Much of the focus of the legislation has been on the proprietary trading and investment banking activity of financial firms. However, one issue going forward is whether the regulations will raise the cost in any way to private clients in getting access, via their banks, to certain types of investment.

While bank lending, derivatives trading and hedge funds have been blamed by many lawmakers and commentators for causing the crisis, some have argued, such as pundits and investors Peter Schiff and Jim Rogers, that much of the risky behaviour of recent years was fuelled by central bank cheap money.