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White House Steps Up Push For a Financial Overhaul Bill

While Democratic Senate Banking Committee Chairman Chris Dodd tries to work out a compromise agreement with ranking GOP panel member Richard Shelby on sweeping financial reform legislation, the White House is revving up its lobbying efforts to help Dodd win necessary support in the full Senate, according to Washington sources.

"The White House believes there's a short window of opportunity to get this done," said a senior Congressional staffer, familiar with the Democrats' legislative strategy.

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In the past week, booth President Obama and Treasury Secretary Timothy Geithner have made major speeches on the subject, underscoring the pressing need for reform, two years after the collapse of Bear Stearns helped trigger the nation's worst financial crisis in in 80 years.

That and the decision to have President Obama meet this morning with Dodd and House Financial Services Chairman Barney Frank, who pushed through financial reform in the House last December, shows the administration is "refocusing the agenda after health care," the source said.

In a press conference outside the White House after the meeting, Dodd said he'd like to get the bill on the floor of the Senate in the next month and have it approved by Memorial Day.

Regan Lachapelle, a spokeswoman for Majority Leader Harry Reid of Nevada, confirmed the timeline.

"We welcome the participation of those who want to be a part of crafting this," Dodd said about Republicans and Democrats outside the banking committee. "That door has been open in the past and still is. But we're going to get a bill done."

Dodd and Shelby are said to be working on a compromise, such that the GOP can offer a number of key changes to the banking chairman's draft legislation introduced a week ago and approved by the committee along party lines earlier this week.

In an unusual move, the bill was marked-up and voted on by the committee, without the consideration of amendments, even though some 500 were submitted by the Friday deadline.

About 60 percent of those amendments were penned by Republicans, but a number of significant ones still came from both the moderate and progressive arms of the Democratic Party.

Senate Banking, Housing and Urban Affairs Committee Chairman Christopher J. Dodd (D-CT) and ranking member Sen. Richard C. Shelby (R-AL)
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Senate Banking, Housing and Urban Affairs Committee Chairman Christopher J. Dodd (D-CT) and ranking member Sen. Richard C. Shelby (R-AL)

In a weekend meeting, Dodd and Shelby agreed to the mark up process, according to sources, and have been negotiating ever since.

"I understand they are talking and close, but still not there," said one source familiar with the GOP's thinking. "It's almost as if the mark-up didn't happen."

As the ranking Republican member on the panel, Shelby's support would appear critical to getting the 60 votes necessary for Senate approval. The Democrats control 59 seats.

But one source said the White House is looking to tweak the legislation just enough to secure one GOP vote.

"That Republican doesn’t have to be Dick Shelby," said the congressional source, adding that one of several moderate Republicans might be convinced to cross over.

Dodd said as much himself at his news conference with Frank.

The White House push comes after the House approved health care legislation by a narrow partisan vote Sunday.

In introducing his bill last Monday, Dodd made it clear he felt time was running out to handle a massive piece of legislation before the November midterm elections, which will change the party composition of both chambers. Equally important is that Dodd is not seeking re-election.

"There's opportunity between now and July 4," the congressional source.

Dodd's 1300-plus page proposal includes a laundry list of items: a new consumer financial protection agency, new supervision of hedge funds and derivatives trading, a reshuffling of banking industry regulators, investor protection, new federal authority to handle too-big-to-fail financial firms meant to limit taxpayer bailout funds and the creation of a systemic risk council as part of an early warning system.

Though the bill reflects months of negotiations with GOP committee members such as Bob Corker of Tennessee and Shelby of Alabama, disagreement remains on both small and large matters.

That's evident in the fact that Corker, who worked side-by side with Dodd for more than a month, introduced almost 100 amendments alone.

Republicans, for instance, feel that Dodd's proposal gives the consumer watchdog too much independence and power, such that its policies and actions will inevitably clash with those of front line regulators, creating safety and soundness issues for the financial system

In a statement Wednesday, Corker said "there have been multiple opportunities to achieve a bipartisan consensus, and allowing the bill to leave committee without doing so is, in my opinion, a strategic error. Majority Leader Reid can call the bill up at any time now, and the White House is obviously very aware of that fact."

Some progressive Democrats are pushing Dodd to tighten the bill in a number of key areas, such as the inclusion of a measure resembling the Depression-era separation of commercial and investment banking, known as the Glass-Steagall Act.

Other Democrats are worried that the new regulatory framework does not do enough to prevent future financial bailouts of so-called too-big-to-fail firms.

Such differences may create impassioned, colorful and time-consuming debate on the Senate floor. That said, there's concern in some quarters that the Democrats may be willing to accept a watered-down bill for the sake of unity.

The House approved its version of the reform bill in December 220-200, but without any GOP votes. That bill, shepherded through the chamber by Rep. Frank more closely resembles the wish list of the White House, which laid out its reform package early last spring.

Frank has said he wants a full-blown, open-hearing reconciliation conference to merge the two bills.