U.S. Senate leader Reid hopes for budget approval Friday

By Richard Cowan and David Lawder

WASHINGTON (Reuters) - The U.S. Senate looked set to pass a $1.1 trillion (700 billion pounds) spending bill in time for a Saturday night deadline, following a narrow House of Representatives vote that averted a government shutdown.

Senate Democratic leader Harry Reid said he hoped the bill would pass on Friday to spare Americans the drama of yet another budget crisis. While there could be some opposition to the measure from both the left flank of the Democrats and some Republicans, it appeared it would garner the 60 votes needed in the 100-seat Senate to overcome any procedural blocks.

The House passed the bill late on Thursday despite a revolt by Democrats against controversial financial provisions that led to a day of drama on Capitol Hill and exposed fraying unity between President Barack Obama and his party.

A vote on the measure was delayed for seven hours after Democrats revolted against provisions to roll back part of the Dodd-Frank financial reform law, which was passed in response to the 2008 financial crisis and aimed to rein in risk taking. Democrats also objected to a provision in the bill allowing more big money political donations. Conservative Republicans objected because the measure did not block funds for Obama's immigration order.

Shortly after passage in the House, both the House and Senate passed a 48-hour extension to allow the Senate more time to consider the measure. While getting the bill through by the new deadline was likely to be less fraught in the Senate, opponents could seek to delay the vote until the 11th hour through measures such as insisting on a full debate.

Reid urged quick passage.

"Since 2011 we have lurched from crisis to crisis with the country constantly under the threat of shutdown or financial catastrophe," he said on the Senate floor. "It's a very bad habit and the American people are very, very tired of it."

Mindful of that weariness, Senate Republican leader Mitch McConnell is also anxious to avoid another unpopular government shutdown as the Republicans head toward taking control of the Senate next year following their midterm election wins in November.

While many Senate Democrats oppose major provisions of the bill, such as the Dodd-Frank measure and one to block the District of Columbia from going ahead with legalizing marijuana as approved by city voters, Reid said it contained many items that Democrats have worked for. Those include more funds for college student loans, money to fight the spread of Ebola and providing the Pentagon additional funds for combating militant group Islamic State.

OBAMA VS PELOSI

Thursday's House drama featured an uneasy alliance between the president and House Speaker John Boehner, enemies in past budget battles but on the same side this time in pushing for passage. It also pitted House Democratic leader Nancy Pelosi, long a staunch Obama ally, against the president.

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The 1,603-page bill, negotiated by Republican and Democratic appropriators and leaders, drew Democrats' ire in the House when they discovered it would roll back a provision of the Dodd-Frank law due to go into effect next year.

That provision would kill planned restrictions on derivatives trading by large banks, allowing them to continue trading swaps and futures in units that benefit from federal deposit insurance and Federal Reserve loans.

Democrats said Republican leaders, flexing their new political muscle after their election wins, had gone too far in trying to roll back Dodd-Frank.

While the White House said it too did not like the Dodd-Frank change, Obama and his administration battled to get Democrats to set aside their objections, arguing that if it failed, the party would get a worse spending deal now and next year under Republican control.

In the Senate, Democrat Elizabeth Warren, long critical of Wall Street and viewed as a possible 2016 presidential candidate, has led the charge against the spending bill because of the Dodd-Frank provision.

She repeatedly railed against it this week in speeches on the Senate floor that caught fire with many House Democrats.

The legislation, she said, "would let derivatives traders on Wall Street gamble with taxpayer money and get bailed out by the government when their risky bets threaten to blow up our financial system."

In the 219-206 House vote, 67 Republicans rejected the spending bill, largely because it failed to take action to stop Obama's executive immigration order. But that was offset by 57 Democrats who voted in favor.

If passed by the Senate, the spending bill would fund all government agencies through September 2015, except for the Department of Homeland Security, which would get an extension only through Feb. 27.

Republicans intend to deny some funding to the agency because it is the department mainly in charge of implementing Obama's order last month shielding millions of undocumented immigrants from deportation.

Republican Senator Jeff Sessions, a leading opponent of the immigration action, has been putting out warnings for a week that he will vigorously oppose the bill because it would fund the Department of Homeland Security.