Published: Monday, 21 Sep 2009 | 2:48 PM ET

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As if Washington’s attempt to rewrite financial regulation wasn’t complicated enough, Senate Banking Chairman Chris Dodd is ready to propose a radically different structure for banking supervision than what the Obama administration and House Democrats support.

Some three months after the White House sent over its legislation reform package to the House Financial Services Committee, Dodd. (D-Conn.) said legislation he plans to introduce would take the supervisory functions of four agencies, including the Federal Reserve and the Federal Deposit Insurance Corp., and give them to a new entity a kind of super regulator.

Though the White House was thought to be considering such an idea at one point in the spring, the final proposal is far less radical in that it merely combines the oversight functions of two agencies — the Office of Thrift Supervision and the Office of the Comptroller of the Currency, while adding some powers to the portfolios of the Fed and FDIC.

"The senator has said more consolidation makes sense," said a spokeswoman for Dodd, who added, the four-into-one approach is "the strongest[articulation] of that, so far."

The Dodd development comes amid growing speculation that political momentum for reform is waning just one year after the crisis and that deep differences of opinion over one or another of the half dozen existing proposals is already enough to dilute, if not doom, legislation this year.

"it does potentially slow it down," said Rep. Scott Garrett (R-N.J), a senior member of the House Financial Services Committee. "We've had deadline after deadline [in the committee] set and they never got hit. The  momentum continues to whither away so by throwing one more stone into the water you slow it down a little more."

"It will slow down the debate over regulatory restructuring by putting another alternative on the table," added independent banking analyst Bert Ely, who called the idea a "non-starter."

Though Democrats and Republicans alike in both houses of Congress have been critical of the Fed’s supervisory performance during the past crisis as well as its future role in the new regulatory framework, thus far only House Republicans have ardently advocated stripping the central bank of its regulatory powers, leaving it to focus entirely on monetary policy.

Garrett, who helped craft the GOP reform plan, said that though he is in agreement with portions of Dodd's approach, "by going the total consolidation route, he's going to find he has a huge challenge ahead with members of the committee."

Industry is also likely to oppose the proposal, because companies and trade groups already have existing relationships with certain regukators.

In objecting to the Fed assuming the place of a systemic regulator, some critics of the White House plan are also wary of allowing the central bank to be involved in federal resolution authority, which would wind down the operations of struggling too-big-to-fail companies in an effort to limit collateral damage to the economy.

The White House, however, choose not to let the matter simmer, saying in a statement that “President Obama and Senator Dodd share a commitment to passing a bill that will usher in a stronger regulatory structure,” adding it recognizes “there will be many ideas put forward and we look forward to continuing to work with the leadership of the Senate Banking Committee and the House Financial Services Committee to get a bill done that accomplishes those goals this year."

The timing of Dodd’s proposal is also noteworthy. It comes just a week after he decided to remain in his role as banking committee chairman, instead of moving over to head the health and education committee, following the recent death of its chairman Sen. Edward Kennedy (D.-Mass.)

"With the decision made, it was full steam ahead," said the Dodd spokeswoman, "But I don't see a particular connection."

What’s more, both the banking and house committees with financial oversight are gearing back up their public hearing schedule on financial reform following the summer recess.

Rep. Frank’s committee has scheduled a number of hearings in the days and weeks ahead and is thought to be working toward a House floor vote in November.

Dodd’s committee this week is examining home foreclosures, asset securitzation and the emergency legislation passed last October.

Dodd and Frank have not always seen eye to eye on both the priorities and timetable of financial reform and their periodic jockeying underscores the difficulty of passing complex legislation involving many government agencies as well as their respective oversight committees in Congress.

“The proposal for a single regulator will complicate matters and make reconciling the House and Senate efforts that much more difficult,” said one industry representative who’s well informed about the legislative process.

Though analysts say Frank has a large enough Democratic majority to push reform proposals through the House — as he did in July with a reform related bill limiting executive compensation — Dodd has a trickier task in trying to accomplish the same in the Senate, where the Democrats are just shy of a filibuster-proof margin.

Dodd will put a package of reforms up for vote, rather than taking a piecemeal approach, which the House has already done in one case by voting on executive pay bill..

On top of that, some members such as Bob Corker (R-Tenn.) support reform in general but are reluctant to rush through a package this year for fear of imposing short-sighted measures with negative, unintended consequences, as was the case with the Sarbanes-Oxley Act almost a decade ago.

At the same time, the White House and Democratic leaders on the Capitol Hill believe that this may be their best chance to nudge the skeptics.

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