WASHINGTON — Senate Banking Committee Chairman Chris Dodd announced Thursday he would finish negotiating a bipartisan regulatory reform bill with Republican Sen. Bob Corker.
"For over a year, the Senate Banking Committee has been grappling with how best to address the many problems that led to the financial crisis," the Connecticut Democrat said in a press release. "In that time Senator Corker has proved to be a serious thinker and a valuable asset to this committee. For that reason, I called him Tuesday night and asked him to negotiate the financial reform bill with me. We met in my office on Wednesday, and given the importance of these issues, he agreed."
The announcement is an unconventional turn of events since the typical path is for a chairman to work with the panel's ranking member first and then bring in more junior members on each side.
But last week Dodd announced that discussions with his panel's senior Republican, Sen. Richard Shelby, had reached an impasse (largely over consumer protections) and Corker reacted quickly by saying that the breakdown would do nothing to derail his work towards a compromise.
A key question remains whether the Tennessee lawmaker would agree to consumer protection provisions that Shelby would not. Shelby and Corker have both said they would oppose letting consumer protections trump safety and soundness and have objected to creating a separate agency.
While Dodd was apparently willing to consider a consumer division within a larger prudential regulator, talks between Dodd and Shelby broke down over how much authority to entrust to such an entity, such as whether to give it rulewriting powers.
Corker voiced concerns about giving the consumer division too much power on a call with reporters Friday.
"The rulemaking piece, though, is a technical issue but it is very important," he said. "I think it depends on what input the prudential regulator has to that rulemaking process and also who carries out actually enforcing those rules. So there are lot of details there that are very, very important to making sure that consumer protection doesn't bump up to the detriment of the safety and soundness of our financial institutions."
Corker called an independent agency a "nonstarter."
"We've all advocated that it be inside the prudential regulator," he said. "That looks like something that people are all coalescing around. Particularly as we move into the rule-making components, but also what lines of products are incorporated, those details are all very important."
Dodd acknowledged key questions remain to be worked out with Corker.
"While many difficult questions remain, financial reform is in a strong position due to the good work done by Banking Committee members, both Democrats and Republicans, to work out this bill," Dodd said. "I am more optimistic than I have been in several weeks that we can develop a consensus bill to bring about the reforms the financial sector so desperately needs to prevent another economic crisis."