Since his first draft was deemed dead on arrival last November, Dodd has been working closely with Republicans, first with Shelby and more recently Corker—after Shelby and Dodd reached an impasse in early February.
Shelby, however, went to work on his own version of a bill, which was said to be a serious substitute.
"Shelby is engaged and while he may not be sitting down directly at the table, he is in the background in a very, very constructive way," said Corker. "As I’ve said all along, to get Shelby on board is a big deal. You end up with an 80 vote bill, and that’s strong."
Democratic committee members Mark Warner of Virginia and Jack Reed of Rhode Island have also been been involved in regular negotiations, although they have focused on other subjects such as resolution authority, a system risk council and over-the-counter derivatives. There has been general agreement in those areas.
The CFPA has been a divisive issue from the start.
Senate Democrats have pushed for a powerful new agency with rule-making, examination and enforcement powers and a director appointed by the president, which is what the House approved in its reform package late last year and is close to what the White House first proposed.
The GOP is concerned that such a structure could potentially clash with existing agencies, creating safety and soundness issues for the financial system. Republicans would also like to see fewer powers and keep the consumer agency out of the Treasury Department to avoid politicizing it..
Dodd's most recent proposal did just that. Corker countered with the Fed. Shelby originally preferred the FDIC, but has since become flexible on the subject, saying it was more a matter of authority than location. Reed would have the agency completely independent and said he will offer an amendment to that effect..
Other senators--both Democratic and Republican--gave the Fed proposal a cold reception, reflecting current Congressional disfavor with the central bank.
As the banking committee negotiations heated up, other key players in the policy debate made their positions known.
Treasury Secretary Timothy Geithner told a group of labor and consumer leaders that the Obama administration will only accept a powerful CFPA with rule making and enforcement authority and sufficient independence, according to one source familiar with the meeting.
Meanwhile, Financial Services Committee Chairman Barney Frank (D-Mass.), who worked closely with the administration on the House version of the reform bill, said he was against putting the agency in the Fed, but could accept the Treasury under the right circumstances.
Though the CFPA issue has been a focal point, senate sources say an agreement on derivatives supervision has also been elusive; it may not be included in the draft legislation and would instead be handled as an amendment later on in the legislative process.
Financial reform—always among President Obama's top legislative priorities—has assumed even greater importance since health care reform stalled.