WASHINGTON (CNNMoney.com) -- The Senate overwhelmingly passed its first major change to the Wall Street reform package Wednesday, approving a bipartisan deal to unwind big financial firms that are considered too big to fail.
The Senate vote, 93-5, signaled that Republicans are working with Democrats to move forward on the financial overhaul package, after agreeing last week to let debate begin.
Sen. Christopher Dodd, D-Conn., worked with Sen. Richard Shelby, R-Ala., for weeks on changes to a part of the bill that deals with taking down falling financial firms. They reached a deal on principle last week, announcing the deal Wednesday.
Among the more significant changes, senators dropped a tax on banks that would have funded a $50 billion pot of money that regulators could tap to help take down failing banks. Now the bill stipulates that banks will be taxed to pay for unwinding banks after a collapse.
"Whether they pay in advance or after the fact, these costs will be paid by Wall Street and not the taxpayers," Dodd said. "I was rather agnostic on it."
Dodd and Shelby also included in their amendment a proposal that toughens up rules that regulators already have to ban bank directors and managers who have recklessly violated regulations from future jobs in the financial sector.
Shelby said he was pleased with the agreement, which attracted many Republican votes.
"Fortunately, we've resolved some of the concerns some of us have expressed about government bailouts," Shelby said Wednesday.
Changes: The deal on unwinding failing financial firms addresses many of the concerns that Republicans have brought up in recent weeks about whether the bill could lead to future government bailouts.
While all lawmakers want creditors and shareholders to bear the brunt of losses when a firm goes through a government-imposed winddown, Republicans feared that the Democrats had given regulators too much discretion to pay some creditors.
The new agreement would allow the federal government to recoup any overpayment made to creditors, to ensure no creditor gets more than they would in a bankruptcy.
Another Republican concern was that the bill didn't do enough to rein in the emergency lending powers that both the Federal Reserve and the Federal Deposit of Insurance Corp. have to prop up banks in trouble.
The Democrats' version would curtail, but not eliminate, those loan-making abilities, making sure that no single failing firm could be saved.
Under the new bipartisan deal, the Federal Reserve would only be able to make loans to banks that are otherwise healthy and just need some credit to get by.
The changes would also require the FDIC to get congressional approval before the regulator agrees to back up any bank debt, as occurred during the financial crisis.
Another change to the bill clarifies and strengthens powers regulators already have to ban bank executives and board directors from the industry if they:
* Violate laws or rules set by banking regulators.
* Participate in "unsafe or unsound practices."
* Omit key details considered a "breach of the fiduciary duty."
Scott Talbott, senior lobbyist at the Financial Services Roundtable said the measure makes sense.
"If an executive or a board member demonstrates a risk to the safety and soundness of an institution, than they shouldn't be allowed to serve," he said.
The Senate also voted 96-1 to tighten language already in the bill to prevent taxpayer bailouts.
Land O'Lakes CEO Beth Ford charts her career path, from her first job to becoming the first openly gay CEO at a Fortune 500 company in an interview with CNN's Boss Files. More
Honda and General Motors are creating a new generation of fully autonomous vehicles. More
In 1998, Ntsiki Biyela won a scholarship to study wine making. Now she's about to launch her own brand. More
Whether you hedge inflation or look for a return that outpaces inflation, here's how to prepare. More