March 11, 2010 -- The head of the Senate Banking Committee will unveil sweeping new reforms for the financial system Monday after failing to reach an agreement with Republicans on the panel.
Sen. Chris Dodd, D-Conn., announced today that he will release his proposals to overhaul Wall Street in the wake of the financial meltdown, even though talks with top Republican negotiator, Sen. Bob Corker of Tennessee, left "a few outstanding issues" unresolved.
The two lawmakers have been locked in negotiations for weeks. Dodd said they "made significant progress," have "resolved many of the items" and will continue to talk in the coming days.
Dodd said he is concerned that the chance for reform will dwindle as memories fade of the near-meltdown of the financial system in 2008. The Connecticut lawmaker released his original proposal last November, but the Banking panel's ranking Republican, Alabama Sen. Richard Shelby, refused to back the measure.
The main sticking point has been the Obama administration's controversial proposal to create an independent consumer protection agency. Republicans have opposed the measure and the financial industry has lobbied furiously against such an agency.
Democrats appear to have relented in an effort to win bipartisan support for the agency. The latest proposal would place the agency within the Federal Reserve, as long as it is given an independent head, independent funding, and rule-making and enforcement powers.
Other elements that appear likely to be included in Dodd's reform bill will be giving the government so-called "resolution authority," the power to wind down large failing firms in an effort to avoid a repeat of the "too big to fail" problems that led to the government's massive bailout of major Wall Street banks.
Dodd is also set to propose a systemic risk council, chaired by the Treasury Secretary, to monitor the nation's economy for possible threats to its stability. The oversight of the nation's biggest banks with assets of more than $100 billion appears likely to remain with the Federal Reserve.
Another element of the reform movement will be an effort to monitor the over-the-counter derivatives market, including the credit-default swaps that played such a pivotal role in the downfall of insurance giant AIG.
Dodd Pushes Financial Reform Bill Without Republican Support
"We are disappointed to hear that negotiations have stumbled," Scott Talbott, chief lobbyist for the Financial Services Roundtable, told ABC News. "We continue to urge senators to work towards a strong bipartisan reform bill."
The House of Representatives passed its reform measure late last year. Rep. Barney Frank, chairman of the House Financial Services Committee, has said he would not support housing the consumer watchdog agency within the Federal Reserve.
Bailout watchdogs such as Congressional Oversight Panel chief Elizabeth Warren, consumer groups, and even the Pentagon and Hollywood celebrities like Heidi Montag have come out strongly in favor of an independent consumer agency.
The slow pace of negotiations in the Senate has sparked criticism in recent months. After unveiling his reform package on Monday, Dodd said he plans to hold a mark-up session in the banking committee the week of March 22.
A panel of economists recently warned that without even stronger reforms than the proposals currently under discussion, another financial meltdown could soon happen.