WASHINGTON — Supporters of financial reform, caught off balance by an end-of-the-year push in the Senate to subject a wide range of new regulations to greater scrutiny, are reacting frantically to what they see as a threat to undermine the Dodd-Frank Act.

The source of their anxiety is legislation introduced early last month by Sen. Rob Portman, R-Ohio. The bill has a chance to move quickly to a vote on the Senate floor, although that possibility became more remote Wednesday when a potential committee vote on the measure was delayed until Nov. 15.

The legislation has the support of Democratic Sen. Mark Warner, and its opponents fear that other Senate Democrats will join him.

"The bill has really been one of these D.C., under-the-radar-screen efforts to really gut some stuff that if it was brought to the surface would never pass muster," said one Democratic Senate aide who expressed alarm. "People are not paying attention. It's going to catch people off guard."

The bill would require independent federal agencies — including the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, the Consumer Financial Protection Bureau, the Securities and Exchange Commission and the Commodity Futures Trading Commission — to conduct more rigorous analyses of the regulations they propose.

The Federal Reserve Board would get an exemption from the bill's requirements for its monetary policy duties, but there is some confusion on Capitol Hill about how far the central bank's exemption would extend.

Agencies contacted for this article declined to comment on the record. But the FDIC, the Fed, the CFPB and the SEC have all expressed concerns to lawmakers about the legislation, according to a Senate source.

Spokespeople for Portman, Warner and Republican Sen. Susan Collins, another co-sponsor of the legislation, did not return calls seeking comment. But industry supporters of the bill argue that their foes are exaggerating its potential impact.

While the measure would require independent agencies to compare the costs and benefits of a proposed regulation, and then to submit that analysis to the executive branch for review, nothing would stop the agencies from moving forward with a regulation even if the executive branch found the analysis lacking, the legislation's supporters say.

"We think that as we try to implement the regulations, the cost-benefit analysis is a crucial piece of the overall analysis," said Scott Talbott, senior vice president of public policy at the Financial Services Roundtable, which supports the bill. "The goal here is to implement the new policies under Dodd-Frank, but we have to be careful not to undermine the economic recovery."

James Ballentine, executive vice president of congressional relations at the American Bankers Association, said his organization welcomes any effort that would allow a full analysis of the new regulations the banking industry is facing.

"And to the extent that this bill or any other bill would allow a fair analysis of, or review of these regulations, we would certainly appreciate it," he said.

Portman, the first-term Ohio senator who is sponsoring the legislation, was director of the White House Office of Management and Budget during President George W. Bush's administration. His bill would give new authority to the Office of Information and Regulatory Affairs, which is located inside OMB.

Portman was reportedly a candidate to be Republican presidential candidate Mitt Romney's running mate, and his proposal bears some similarities to what Romney has promised to do in the regulatory sphere if he's elected.

The legislation would allow the president to require independent agencies to take up to 13 additional steps before issuing a new rule. Among those potential requirements is a cost-benefit analysis, which is already required of executive branch agencies such as the Environmental Protection Agency.

Later on, regulatory officials at the White House would issue a written determination of whether the independent agencies had fully complied with the required analysis.

A negative assessment would not technically tie the agency's hands. But financial reform advocates argue that, practically speaking, poor marks would prevent agencies from moving forward with new regulations, because the administration's ruling would be powerful ammunition in industry lawsuits against the new regulations.

"The litigation that's going to be created from this act is almost unbelievable," said Dennis Kelleher, president of Better Markets, a non-profit group that advocates for financial reform. "Now if you're the industry, that's great."

"They're called independent agencies because they're independent of the executive branch. What this bill would do is actually subordinate them to the executive branch," Kelleher added. "This really is a historic, breathtaking reversal of the way government has protected people in this country for the last 80 years."

The bill, which has not been the subject of a Senate hearing, is currently under consideration by the Homeland Security and Governmental Affairs Committee, chaired by Connecticut Sen. Joseph Lieberman, an independent who caucuses with the Democrats.

The committee was considering holding a vote on the measure in September, but it informed members Wednesday that its meeting will be delayed until after the elections, and that no decision has been made on whether the bill will be among those considered at that time.

Delaying the vote until after Election Day could make it easier for vulnerable Democrats such as Sens. Jon Tester and Claire McCaskill, both of whom are members of the committee, to vote no.

There is still a possibility that the legislation could be attached to another bill during the lame-duck congressional session that will follow the Nov. 6 elections. At that stage, it would need the support of at least 13 Democrats to reach the Senate's routine 60-vote hurdle.

An important player in the Senate deliberations will be Warner, the Virginia Democrat whose support for the bill has increased its chances of becoming law. He has long been interested in subjecting the costs of new regulations to greater scrutiny, proposing in 2010 that each new regulation be met with the repeal of an existing one.

The Obama administration has not weighed in publicly on the bill, though last year it threatened a veto of a related House measure that had some Democratic support.

In the Senate, opposition to the legislation may also emerge from committees that would see their authority over independent agencies diminished. Agencies such as the Nuclear Regulatory Commission and the Consumer Product Safety Commission would be affected by the bill, in addition to the financial regulators.

Senate Banking Committee Chairman Tim Johnson, D-S.D., expressed apprehension about the legislation's potential impact on Dodd-Frank.

"Chairman Johnson doesn't want cost-benefit analysis to be a means to watering down Wall Street Reform," said Sean Oblack, a Johnson spokesman.

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.