US Treasury's Barr: swaps deal strengthens reform

WASHINGTON, April 26 (Reuters) - Two key U.S. Democratic senators are "very, very close to a deal" on reforming derivatives trading that will strengthen a financial reform bill, U.S. Treasury Assistant Secretary Michael Barr said on Monday.

Barr, speaking to reporters after remarks to the Independent Community Bankers of America, said Senate Banking Committee Chairman Christopher Dodd and Senate Agriculture Committee Chairman Blanche Lincoln would work together to close loopholes that allowed derivatives trading to threaten the financial system.

"I think that both chairmen worked very, very closely together; they are very, very close to arriving at a deal that I think will be a stronger bill, a tougher bill, a bill that brings derivatives trading out of the dark, that improves our ability to supervise the system, and make sure that there are appropriate protections against that build-up of excessive risk in the system," he said.

However, Barr declined to comment on specifics of the agreement after people familiar with the deal said on Sunday it would force banks to spin off their swaps desks. (Reporting by David Lawder; Editing by James Dalgleish)