Senator Richard Shelby (R-Ala.) has written a letter to Treasury Secretary Timothy Geithner saying the current financial regulation proposal making its way through the senate does not end "too big to fail," CNBC has learned.
In his letter, Shelby says the so called Dodd bill (for Senator Christopher Dodd (D-Ct.) would create a "$50 billion slush fund" at the Treasury Department. Shelby goes on to say the bill does not ensure that taxpayers are protected.
Earlier on Thursday, Geithner said the Obama administration hopes to attract Republican support for a financial overhaul measure pending in the Senate.
Geithner told reporters he believed the administration was in a good position to get a measure approved quickly with the support of Republican lawmakers. That would stand in contrast to the administration's health care legislation, which did not attract Republican support.
"Our hope is, and I think we're very close, our hope is we're going to have Republicans join with Democrats in passing a strong bill quickly," he said.
The Senate Banking Committee on Monday approved a measure on a party-line vote with no Republican support. To be able to overcome the threat of a filibuster, Democrats will need to attract Republican votes when the measure comes up for debate in the full Senate.
The legislation working its way through Congress represents the most sweeping change in financial regulation since the 1930s.
It would give the government power to split up financially troubled firms considered to represent a threat to the economy. It also puts together a council of regulators to watch for risks in the financial system and creates an independent consumer watchdog.
Geithner said that the administration would not support any measure that did not provide for a consumer protection agency with an independent budget and the ability to write rules and enforce those rules across the financial system.
Geithner spoke at the end of a meeting with officials from the Defense Department and military advocacy groups to discuss the need to pass financial overhaul with strong consumer protections. Geithner said this was especially important given that military families are often the victims of predatory lending practices.
"It's about providing basic protections for consumers across the country from the kind of ... abuse that was at the center of this financial crisis," Geithner said.