Reporting from Washington — Congressional attempts to pass the most sweeping overhaul of financial regulations since the Great Depression suffered a potentially devastating blow Thursday as the lead senator working on the legislation vowed to move forward next week without Republican support.
With the legislative clock ticking and bipartisan talks stalling, Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.) said he needed to press ahead without the consensus legislation he has been seeking during weeks of intensive negotiations with Republicans.
"The moment has arrived to put down a proposal," Dodd said about an overhaul that is a top priority this year for President Obama.
Dodd said he was optimistic about passing a bill this spring that would dramatically restructure the federal regulatory system to avoid a repeat of the financial meltdown that staggered the U.S. and world markets.
But even though bringing a bill before his committee represents progress toward passing legislation this year, Republicans have the votes to stop any legislation in the full Senate if they don't like it.
"A bipartisan bill is the most likely way to achieve success," said Scott Talbott, chief lobbyist for the Financial Services Roundtable, which represents large financial firms. "Without bipartisanship, the bill faces and uphill battle."
Dodd's attempts to lure Republican support have been unsuccessful. He negotiated for weeks with Sen. Richard C. Shelby (R-Ala.), the committee's top Republican, before reaching an impasse in early February. Dodd then began talks with Sen. Bob Corker (R-Tenn.), and their staffs have been working around the clock in recent days to resolve their differences.
Although the talks have been fruitful, Dodd said Thursday "a few outstanding issues remain," and time is running out for the Senate to deal with a complex bill this year with midterm elections looming.
Dodd said he would unveil his latest draft of the legislation Monday, which would reflect Corker's input, and the committee would begin considering it the following week before lawmakers leave Washington for a two-week recess. Dodd promised to continue talks with Republicans in hopes of hammering out a bipartisan agreement.
But there is strong opposition among Republicans, as well as the financial industry, to key aspects of the legislation. The House passed a sweeping overhaul in December without a single Republican vote.
The House bill, which closely resembles the Obama administration's proposal, aims to prevent a repeat of the financial crisis by making major changes to the federal government's oversight of the industry.
It would create an independent agency to protect consumers in the financial marketplace, give the government broad new power to seize and dismantle large financial firms whose failure would pose a risk to the economy, allow regulators to break up firms they deem too large and expand oversight of the complex world of derivatives.
Dodd, who is leaving at the end of the year, promised that his bill would end the problem of institutions that are seen as too big to fail and require federal bailouts.
"In the limited time I have left before I retire, I'm determined to have that end," he said.
But Republicans hold enough seats to filibuster any legislation, and failure to produce a bipartisan financial regulatory bill spells trouble for the White House. Obama had pushed Congress to pass the regulatory overhaul last year, and Democrats are eager for a legislative victory -- particularly one that directly addresses the causes of the deep recession -- as they head into congressional elections in November.
"Given what the American people have lived through as a result of that economic collapse, I don't believe many [lawmakers] are going to want to go home and face voters next November not having done something," White House Press Secretary Robert Gibbs said.
Corker said Thursday that Dodd's role as a key player in trying to push through a major healthcare bill in the coming weeks led him to pull the plug on their talks even as the pair were close to final agreement.
"I told him we're on the five-yard line; we can get this done, let's just keep our heads down," Corker told reporters. "There's no question that White House politics and healthcare have kept us from getting to the goal line." He said he was disappointed but would continue to work with Dodd.
Dodd said the healthcare bill wasn't the reason for moving ahead with his bill.
"The real problem I'm facing is that clock," he said.
In addition to his talks with Corker, Dodd assigned bipartisan pairs of senators to work on some specific parts of the legislation, such as new rules for derivatives. By all accounts, those teams have made good progress.
But Dodd and Corker were dealing with some of the most controversial parts of the legislation, particularly the new consumer agency. Dodd's attempts to find common ground with Corker on the agency, which many Republicans and the financial industry strongly oppose, has led to a backlash from some Democrats.
Jaret Seiberg, a financial policy analyst at Concept Capital's Washington Research Group, said there still was plenty of time for bipartisan agreement before the full Senate took up the bill.
"What matters most is progress," Seiberg said. "This moves the legislation to a committee vote, and we fully expect Republicans to re-engage before the bill goes to the floor and that's when we expect the major compromises to occur."
But Corker said he couldn't imagine "passing a bill with this type of substance in it out of a committee in a week."
Times staff writer Janet Hook contributed to this report.