Whispers around Washington hold that more liberal members of the committee, including Sherrod Brown of Ohio (who may become chairman next year) and Elizabeth Warren of Massachusetts, are lining up in opposition to the bill because they do not believe it does enough to further the goals of expanding affordable housing.
"The GSE (government-sponsored enterprise) 'juggernaut' is mostly smoke & mirrors," one senior Democratic Washington source told me this week. "Brown and Warren are letting people know that it's a non-starter and [Senate Majority Leader] Reid is playing a little Kabuki because his Las Vegas housing market is in the tank and he doesn't want to upset any apple carts during the slow recovery there."
The chances that the full Congress would pass significant housing reform this midterm election year were always fairly slim. House Financial Services Committee Chairman Jeb Hensarling's "PATH Act" would completely eliminate the government role. That bill may never get to the House floor. But if the House were to take up a housing bill it would almost certainly be something Democrats would fully reject.
(Read more: After Fannie and Freddie—Who's next?)
The Senate Banking goals were thought to be more modest. Lay down a marker for any future housing reform efforts by at least getting a bill out of committee. That could give the party a talking point for the fall—We want to reform housing finance!—without the pain of actually passing anything.
Now even that goal seems like a bridge too far. But not everyone is giving up on the idea that a bill could eventually emerge from the committee. Brown and Warren alone could not stop a bill. They would need to gain critical mass for their opposition, something that's hard to do at the moment with no formal language on the table.
"If the chair and ranking member have 16 plus votes on the banking committee, Brown and Warren are mere bystanders," said a plugged-in D.C. Republican. "If they choose to stay off the deal, the only thing they will control is the timing of when they withdraw or get beaten on their amendments. [Reid], however, holds far, far more power over this bill. On pretty much a unilateral basis, he can stop it cold or rewrite it entirely."