Hours before Senate Banking Committee Chairman Chris Dodd is to release draft legislation for sweeping financial reform, the panel's ranking Republican member said his party would meet Democrats "at least half way."
Sen. Richard Shelby of Alabama told CNBC that though he hadn't seen Dodd's bill—scheduled to be released at 2 p.m. ET Monday—he and his GOP colleagues agreed with "85 to 90 percent of it." (See the full interview in the video below)
Sources familiar with the Dodd's draft say it would consolidate banking regulators and create a systemic risk council. It would also create a new consumer watchdog agency within the Federal Reserve.
The provisions are very similar to much of what was reported to be agreed to by Dodd and the GOP's chief negotiator Sen. Bob Corker of Tennessee during a month of discussions aimed at creating a bipartisan blueprint. Shelby was peripherally involved in those talks, having stepped back from the lead role in early February.
As the Dodd draft now stands, sources said it calls for a new systemic-risk council with a presidentially-appointed chairperson and seven other members. They include the Treasury Secretary as well as the chairs of the Fed, FDIC, SEC and CFTC and a new banking regulator. This council would have the authority to handle the resolution of too-big-to fail firms, according to the source.
The source, who emphasized that some of the components could change before the bill's official release, said it also contained the following:
Shelby called the issue of the CFPA's powers "a crucial question," saying they could "run into the issue of safety and soundness," and essentuially clash with the policies of front line regulators.
Shebly said "we are trying to have resolution authority so nothing is too big to fail."
At this point, the status of less high-profile provisions remains unclear. They include how new regulation of over-the-counter derivatives would exclude end-users, or firms that use the instruments as a hedge.
Dodd told Republicans Thursday that he wanted to unveil a bill Monday and a markup of the legislation a week later because "there was not a lot of time left" to move a complicated bill through Congress" during an election year.
Shelby, Corker and other GOP members sent Dodd a letter Friday urging him to slow down the process, saying the "proposed timetable will not allow members sufficient time to fully understand the details of [the] legislative proposal."
CNBC.com obtained a copy of that letter.
Commenting on the letter, Shelby said "we don't believe you can rush this through," but wouldn't specify a desired timeline, adding "we don't want to put a calendar on anything."
Thus far, the emerging Senate version and the Dodd bill differ in several key ways from reform legislation approved by the full House late last year.
For instance, under that plan, the CFPA would be an independent agency, with a presidentially appointed director, subject to Senate approval. The agency would have broad rule-making and enforcement authority.
Two Democratic senators have already said they will submit an amendment calling for a similar structure.
The proposal to put the CFPA under the Fed has already encountered significant opposition from some Senate Democrats as well as House Financial Services Chairman Barney Frank (D-Mass.), who shepherded the bill through that chamber.
President Obama is also an ardent proponent of a a strong, independent CFPA, but it is unclear what his position is on a somewhat watered-down version.
The Dodd proposal, in placing authority under the Fed, eases GOP concerns that a consumer agency might create safety and soundness concerns with the financial system by creating policies that clash with those of other front-line regulators.
In another key difference, the House version of the bill calls for a $150-billion fund based on bank fees to cover resolution of big firms.
Frank has already said that he wants any Senate bill to be reconciled with the House one in a open-hearing, full-conference mode, so voters can follow the votes of participants.
Any bill by Dodd is likely to face opposition at the committee level as well as the full Senate even before reconciliation, all of which will slow down the legislative process.
"I understand the time constraints that Sen. Dodd is under," said Corker.