A system for controlling hydraulic fluid supplied to a torque converter of an transmission includes a torque converter including a chamber containing an impeller and a turbine, and a bypass clutch having a variable torque capacity, a source of variable control pressure, a latch valve changes in response to the variable control pressure alternately between an unlatched state, wherein the latch valve produces a low pressure output, and a latched state, wherein the latch valve produces a high pressure output, a first valve for limiting hydraulic pressure in the chamber alternately at two magnitudes of pressure in response to the low pressure output and the high pressure output, and a second valve responsive to the variable control pressure for regulating a magnitude of hydraulic pressure that actuates the bypass clutch and changes the torque capacity of the clutch.