As anticipated, Senate Banking Committee Chairman Chris Dodd (D-CT) offered a compromise for the derivatives section of the financial reform bill on Tuesday. He did so almost literally at the last-minute -- offered just three minutes before the noon deadline for new amendments. This should result in the few Republican votes the bill needs to pass tomorrow.

The Washington Post reports on how the amendment will affect the controversial provision that would have forced banks to spin-off their derivatives desks, or place them in a separate affiliate:

Under the compromise, the Senate would keep the sweeping provision, but delay its implementation for two years while it's studied and quite likely kill it at the end.

Dodd's plan calls for submitting the derivatives rules, which were initially proposed by Sen. Blanche Lincoln (D-Ark.), for study by a federal council of regulators. Several key members of the council and Treasury Secretary Timothy F. Geithner, who could have final say under the compromise, have serious reservations about forcing banks to get out of the derivatives business altogether.

So he didn't kill the provision, just sent it to its death. As noted here, virtually every significant Washington policymaker is against the proposal. They will likely be the ones sitting on that council. According to the Post, Geithner, in particular, would decide if the provision will survive. Considering that the Obama administration is against the rule, it's as good as dead.

Of course, this is a politically savvy move. Democrats can now blame the council for the death of the proposal. Sen. Blanche Lincoln (D-AR) can continue to say that she advocated for it and made it a part of the bill. It was theorized that Dodd might wait until after her Tuesday primary to offer this amendment, and he did wait precisely as long as possible. It should have little effect on voter's decisions, given the timing. And even if a run-off is required for her seat, she can still claim she took a strong stance against Wall Street.

This last-minute move by Dodd should help guarantee a few Republican votes from Senators who were very concerned about this piece of the legislation. Notwithstanding any highly controversial amendments passing before the big vote tomorrow, the bill should easily pass.