UPDATE 2-Lincoln on "right track" with swaps desk rule-Dodd
* Lincoln "on the right track" with spin-off measure-Dodd
* Harkin: Supporters don't want spin-off "tinkered with"
* Lincoln will fight to keep spin-off in bill-aide (Adds Lincoln will continue to fight for spin-off, paragraph 5)
By Charles Abbott
WASHINGTON, June 9 (Reuters) - Some Democratic senators emerging from closed-door financial reform talks on Wednesday praised a controversial measure that would require banks to spin off their lucrative swaps desks.
The measure, put forth by Senator Blanche Lincoln, is "a strong provision in the bill," said Senate Banking Committee Chairman Christopher Dodd, who three weeks ago had tried to soften it.
"I think she's on the right track," Dodd told reporters after the meeting, held as a joint Senate-House committee is set to begin to hash out the final version of the financial reform bill.
Lincoln won a tough battle for the Democratic nomination for her Arkansas Senate seat on Tuesday. Her tough derivatives provisions have been opposed by banks and their regulators, and some congressional Democrats have also raised concerns.
An aide said Lincoln "plans to continue to fight for her (spin-off) proposal."
Dodd said Lincoln's victory strengthened her hand in the negotiating process. As Agriculture Committee chair, she will be the chief Senate negotiator on the agriculture and derivatives portion of the bill, he said.
"I will certainly listen to ideas that people have on matters that can deal with this in some way," Dodd said. "Obviously it's an area that we're going to have to talk to Blanche about."
Lincoln, who did not speak with reporters on Wednesday, got a round of applause from her fellow senators for winning her race.
Separately, Senator Tom Harkin, another a member of the House-Senate panel, also said he supports Lincoln's swaps desk proposal, which is known as Section 716.
"Some of us are very strong for Section 716 and we don't want it tinkered with," Harkin told reporters.
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