WASHINGTON — The window is rapidly closing for the inclusion of key banking measures in the budget package as lawmakers remain sharply divided over the bill.

It is increasingly likely that Congress will blow past its Dec. 11 deadline, forcing a Friday vote on a short-term continuing resolution, with talks expected to continue over the weekend and into early next week.

The banking industry has been pushing hard to move a host of regulatory reform measures through the appropriations deal, but there's little sign that a major bipartisan compromise on those provisions is in the offing. The industry's job is made even harder by the fact that so many other pressing issues remain top of mind for congressional leaders and the White House, including funding for Planned Parenthood, energy policy and fights over immigration and foreign relations.

"Issues that resonate with the voting public are much more likely to get on a policy rider or cause a temporary CR for the specific agency in question," said Brandon Barford, a partner at Beacon Policy Strategies. "Things that businesses and lobbyists care about -- there's not a lot of phone calls happening in the district offices on those."

In recent days, talks have slowed, if not halted, between Senate Banking Committee Chairman Richard Shelby, R-Ala., and moderate Democrats, according to those watching the process closely. Lawmakers have been working for months to reach a broader deal on Shelby's regulatory reform legislation, which passed the banking panel down party lines in May.

House lawmakers, including Rep. Jeb Hensarling, R-Texas, chairman of the Financial Services Committee, have reportedly proposed their own banking measures to be included in a final deal, though the focus remains centered on Senate talks.

Progress towards a deal has been challenging. Perhaps the biggest hurdle is remaining skepticism over the inclusion of financial services riders in a budget package at all. Progressives have criticized the idea for months, with many still angry after lawmakers included the rollback of a Dodd-Frank Act swaps rule in last year's must-pass spending bill.

Sens. Elizabeth Warren, D-Mass., Sherrod Brown, D-Ohio, Jeff Merkley, D-Ore., Jack Reed, D-R.I., and Bill Nelson, D-Fla., have all spoken out on the Senate floor against the inclusion of any controversial Dodd-Frank changes in the spending bill this year, and presidential candidate Hillary Clinton penned a Dec. 7 op-ed in the New York Times supporting that pushback. The White House has also threatened a veto on any provisions that would unwind Dodd-Frank.

"It's hard to not think about the swaps pushout deal at moments like this — it's undeniably poisoning the well even a year later, because there's a mistrust of any financial services provisions outside of very targeted community bank measures being included in large spending bills," said Isaac Boltansky, a policy analyst at Compass Point Research & Trading.

Congress also passed a massive, five-year highway deal earlier this month that contained a host of regulatory relief provisions for banks, including a handful of measures with strong bipartisan agreement. It's possible that effort, while important to the banking industry, borrowed some of the momentum necessary for pushing along reforms via the budget. That's especially the case because some of the key provisions passed were also included in Shelby's legislation, such as a provision to loosen annual privacy notice rules and another to extend exam cycles for some small banks.

"The community bank provisions [in the Shelby package] were viewed as having enough magnetism to draw Democrats to the table for a broader deal," said Boltansky. "Without those in the equation, it's incredibly difficult to entice moderate Democrats to come across the aisle."

Still, banking officials are not giving up.

James Ballentine, executive vice president for congressional relations and political affairs at the American Bankers Association, said that he remains "realistically optimistic" about the chances for some banking measures to make it into the final package.

Banking Committee members may not have come to a broad deal on Shelby's legislation, but there may be smaller provisions where an agreement was reached that could move on their own. It's not yet clear what measures specifically might make the cut.

"There's no way if you are in agreement that you should not move forward on something," Ballentine added.

A spokeswoman for Shelby said Wednesday morning that the chairman "continues to have discussions with his colleagues and is looking at options to enact meaningful reforms."

It's also possible that kicking the deadline for the budget deal to sometime next week could give the industry a little more time to secure passage for at least a handful of piecemeal measures. While talks have been going on for months over Shelby's bill, there's more of an urgency now, with the deadline so close.

"A week at the end of the process when everybody's focused and trying to get something resolved is a lot different than a week back in June. Not all weeks are created equally," said one financial services lobbyist.

Meanwhile, negotiations over an unrelated package of tax provisions, known as "extenders," are also continuing in earnest ahead of the holiday recess. House lawmakers unveiled a package on Monday, which included some contentious changes to the handling of real estate investment trusts, in addition to extensions through 2016 for the Mortgage Forgiveness Debt Relief Act and a mortgage insurance deduction. It's not clear that lawmakers will be able to arrive at a broad bipartisan deal on tax extenders in coming days, though short-term extensions for some central provisions are expected to pass before Congress departs for the year.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.