The Senate was expected by the end of the week to approve the biggest overhaul of financial regulations since the 1930s after the measure finally cleared a procedural hurdle on Thursday.
The legislation is one of President Barack Obama's top domestic priorities. If passed, it would increase restrictions on the banking industry and some say reduce profits.
After the Senate voted 60 to 40 to wrap up debate on the bill, Obama said the final version will hold financial firms accountable but not stifle the free market.
This is not a zero-sum game where Wall Street loses and Main Street gains, Obama told reporters.
Three Republicans voted with Democrats to move the bill to a final vote, while two Democrats voted with Republicans against advancing it.
Final passage could come as soon as Thursday afternoon and as late as Friday evening as aides said the Senate may vote on a handful of amendments before the final vote. The Senate's bill has yet to be reconciled with the House version.
Senators from both parties are eager to look tough on Wall Street ahead of November mid-term congressional elections, analysts said, and the bill includes measures opposed by banks such as a requirement they spin off their lucrative swaps trading desks.
The banking industry would prefer the bill to be approved sooner, rather than later, analysts said, because most of the scores of possible amendments still under consideration further threaten its profits.
On Wall Street, the Dow Jones industrial average slid 3.6 percent as selling picked up late in the day and indexes closed near their session lows after the Senate vote.
Barney Frank, the Democratic head of a key House committee, told CNBC it is important to get financial reform approved to ease market uncertainty. He said Obama could sign a bill into law well before July 4.
LINKED AMENDMENTS EYED
The Obama administration said it supports an amendment, offered by Democrats Jeff Merkley and Carl Levin to the overall Senate bill that would tighten the proposed Volcker rule on curbing risky proprietary trading by banks.
The rule was first proposed in January by Obama and White House economic adviser Paul Volcker.
But an administration official said the Merkley-Levin amendment should not pass at the price of approving another amendment from Republican Sam Brownback on car loans. The current bill already provides strong protection against excessive risk-taking by banks, the official said.
Brownback wants to exempt car dealers from the oversight of a new financial consumer watchdog. The Pentagon has said it opposes such a move because car dealers near military bases sometimes target service members with unfair car loans.
In a procedural twist, the Merkley-Levin and Brownback measures' fates were linked because Democrats kept the Merkley-Levin measure alive this week by tying it to Brownback's amendment. Analysts said that meant both might pass.
Bank lobbyists have worked for months to weaken the Senate bill with little success. They were refocusing on prospects for watering it down in a House-Senate conference after Senate passage. The bill, if approved, would have to be reconciled with one passed by the House of Representatives in December.
The president has to be very, very happy, Republican Bob Corker said after the vote. I know it has to be a major victory for him -- in my opinion it's an overreach.
LINCOLN AMENDMENT EYED
Another dispute still unsettled was a provision in the bill from Democratic Senator Blanche Lincoln that would force banks to spin off lucrative swap trading desks into affiliates. Major financial groups such as JPMorgan Chase, Bank of America and Goldman Sachs could be hit hard by such a requirement, analysts said.
Sheila Bair, chairman of the Federal Deposit Insurance Corp, reiterated concerns that Lincoln's approach could increase, not decrease, risk. Analysts said they expect it will not be included in the final bill.
Lincoln, who faces a primary challenge from the left in her home state of Arkansas, said she would fight to keep the provision in the bill.
But even if it survives the Senate, lawmakers could strip it out as they reconcile differences with the financial-reform bill passed by the House.
Two Democrats who withheld their support for wrapping up debate on the bill on Wednesday did so again on Thursday.
Senator Russ Feingold, one of the chamber's most liberal members, has said the bill is not tough enough. Senator Maria Cantwell has pressed for tighter regulation of derivatives and breaking up the largest financial conglomerates.
Republican Scott Brown was the only lawmaker to switch his vote after meeting with Senate Democratic Leader Harry Reid early on Thursday.
In a statement, Brown said Reid had assured him that the final legislation will address his concern that the Volcker rule could hurt insurance companies and other firms that did not contribute to the financial crisis.