Senator Carl Levin sees financial reform in 2009

US Senator Carl Levin (D-MI) answers reporters' questions during the 2009 Reuters Washington Summit in Washington, October 19, 2009.

WASHINGTON (Reuters) - Public anger at Wall Street abuses will fuel the push for financial regulation reform and hopefully lead to a deal by year end, a senior Democratic senator said on Monday.

Senator Carl Levin said the Senate has strong momentum to complete the broad reform, which is expected to include the creation of a new consumer protection agency, increased regulation of derivatives and empowering regulators to police risks to the financial system.

"There's a lot of anger out there, and it's justified," Levin told the Reuters Washington Summit. "I believe it's going to help."

Levin also said he hopes excessive bank bonuses and stock options can be reined in. He said the appropriate role of the government in curbing pay at private-sector companies is through the tax code.

"I would put some kind of limit on tax deductibility," he said at the summit being held at the Reuters office in Washington on Oct 19-21.

Levin said the Senate has strong leadership in the form of Christopher Dodd, chairman of the Senate Banking Committee, which will help push forward financial regulation reform.

So far the Senate, occupied with healthcare reform, has been slow to move on more than a dozen proposed financial reform bills that the administration has sent to Congress.

The House has been more deliberate in setting a timeline, and has pledged to have a full House vote on financial reform next month.

The full House has passed a bill to put new curbs on executive pay, and the House Financial Services Committee last week moved forward new rules for the $450-trillion over-the-counter derivatives market.

Levin said the public senses the need for more reasonable financial regulation, especially for derivatives and shadowy trade practices that benefit a few people and could pose risks to the larger financial system.

"I think the anger out there against the Wall Street abuses is so palpable," he said.

(For summit blog: blogs.reuters.com/summits/)

(Reporting by Karey Wutkowski; Editing by Anthony Boadle)