Senators Dodd, Shelby Report Major Progress On Wall Street Reform, Deadlock May Be Avoided
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WASHINGTON — The top Senate Democrat and Republican negotiating new Wall Street regulation said Wednesday they expect to resolve their differences before the end of January, an optimistic outlook for a bill that had seemed mired in partisan conflicts.
Sens. Christopher Dodd, D-Conn., and Richard Shelby, R-Ala., issued a joint statement saying bipartisan negotiations have resulted in "meaningful progress." The Senate Banking Committee could consider a compromise bill as early as Jan. 26, people familiar with the discussions said.
The statement's tone contrasted with Shelby's dismissive reaction when Dodd released a draft of his bill last month. At the time, Shelby said the Senate had not done enough to study the causes of last year's financial crisis to adopt regulations to address them.
While both listed common goals for a regulatory overhaul, they offered no specific points of agreement. Still, if the Senate creates a bipartisan bill, it would be in sharp contrast to the House, which passed a regulatory measure with no Republican votes.
"These talks have been extremely productive, with members providing great insight and demonstrating a desire to get this done and get this done right," Dodd and Shelby said. Dodd is the Banking Committee chairman and Shelby is its ranking Republican.
A Dodd-Shelby compromise would differ significantly from the House version. That could require difficult negotiations to hammer out a bill that can pass both chambers.
The House legislation would create a system to look out for financial sector risks that could undermine the economy. It would make it easier for the government to dismantle failing companies, and even those that are healthy but threaten the financial system. It would create a Consumer Financial Protection Agency that would regulate lending and credit cards. And it would rein in financial instruments that have long operated outside government scrutiny.
Among the goals both senators said they had in common were ending a financial system where firms grow to the point they are considered too big to fail. They said they agreed to strengthen consumer protections and said the Federal Reserve should lose some of its regulatory authority and focus on monetary policy.
One of the major sticking points between Dodd and Shelby is the proposed Consumer Financial Protection Agency, a central feature of President Barack Obama's regulatory plan. Dodd supports the idea and Shelby opposes it.
But lobbyists, aides and senators say committee members are considering a proposal that would create an agency that writes consumer regulations but would leave enforcement to specific banking regulators. They said the proposal had yet to be embraced by Dodd and Shelby and could still be scrapped.
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JIM KUHNHENN 12/23/09 04:51 PM ET Associated Press