A proposal that would ban banks from engaging in proprietary trading, an idea originally floated by senior Obama adviser and former Federal Reserve Chairman Paul Volcker, is still in the mix, having passed in committee. Volcker, along with current Fed chairman Ben Bernanke, have both voiced opposition to the derivatives trading proposal, which they believe is overly onerous.
Already the possibility of new rules that could roil the financial sector has drawn the concern of New York City Mayor Michael Bloomberg.
"As Mayor Bloomberg has said repeatedly, we need real reform of the financial industry that creates greater transparency in the marketplace and doesn't eliminate jobs for the 500,000 New Yorkers who work in the industry or diminish the economic strength of New York City or the entire nation," a spokesman for Bloomberg told ABCNews.com.
Switzerland, among the most lax European jurisdictions in terms of regulations, and already a global banking hub, would be the most logical destination should Wall Street decide to wave bye-bye, Rochdale's Bove said. Bermuda, Luxembourg and the Cayman Islands are other possible locales.
Spokespeople at the largest investment banks, such as Goldman Sachs and JPMorgan Chase, declined to comment for this story. None denied outright that any such contingency planning was underway. A spokesman for the Securities Industry and Financial Markets Association also declined comment.
"In an effort to further regulate derivatives and proprietary trading, the U.S. could actually lose oversight," TABB's McPartland said.
"Some might think it would be great to get the risks out of the U.S., however losing those businesses would cost jobs, tax revenue and make it considerably harder for banks to extend credit," he said.
"We heard this sentiment in 2006 when Wall Street argued they needed less regulation," said a Senate staffer who has been involved in the reform negotiations. "No one believes them anymore."
The staffer asked for anonymity, citing a strict policy not to be quoted by name.
"Who wants to be remembered as the politician who knocked the legs out from under the global financial engine?" countered industry member Tanya Beder, CEO of SBCC Group, a trading risk management firm in New York.
Beder, a former trading executive at Citigroup and one of the early pioneers of swaps trading, added: "If the reform is too onerous, banks will either move their trading businesses offshore or invent new ways of circumventing the rules. The genie is out of the bottle."