Senate Banking Chairman Chris Dodd (D-Conn.) will push to finish committee work on financial reform legislation by February – moving ahead with a top White House priority whether Republicans are on board or not, said a source familiar with his thinking.
“We’re at the point where within the next week we’ll try and bring these discussions to a conclusion, one way or the other,” the source said.
As part of his attempt to get a bipartisan deal, the Connecticut Democrat has discussed the idea of ditching the stand-alone Consumer Financial Protection Agency, a central plank of the Obama administration’s reform proposal, in exchange for a strong consumer-protection entity within another federal agency.
But the source said the idea has come up in talks as “one of the numerous things that has been discussed” on the issue. “The Republicans, as you know, have been from the outset opposed to a separate agency. If we’re negotiating with them, it’s logical that we would talk about alternative structures.”
The Wall Street Journal reported Dodd’s discussions about scrapping a stand-alone CFPA. But the source said that the idea has not been offered as a specific proposal to Republicans, and Dodd hasn’t agreed to deal along those lines.
Republicans concurred. “Negotiations are ongoing and no agreement has been reached on anything,” said Jonathan Graffeo, a spokesman for Sen. Richard Shelby (R-Ala.), the top Republican on the banking committee.
Dodd’s next step is to convene the committee mark up of the bill, with an aim to wrap up by the end of February. That mark-up would either be bipartisan or partisan, depending on the outcome of negotiations.
“Dodd feels this has to get done by February, whether it gets done right before the President Day’s recess or right after. Dodd believes that this is an election year, which is normally short, and he believes that this year, given the political craziness, this year is going to be extra-short,” said the source.
As for CFPA, Dodd has tried to separate discussions of structure from those on the power and authority the consumer protection entity would have and remains adamant that the consumer watchdog would be independent no matter what structure evolves, according to the source. “Dodd has never endorsed anything other than an independent agency.”
Dodd has four “lines in the sand” when it comes to the power of the consumer entity: The head of the entity must be presidentially appointed, and there would be a single chief. The legislation must provide it a dedicated source of funding. The body must have independent rule-making authority. And the largely unregulated non-bank players such as mortgage brokers, payday lenders and debt collectors – widely viewed as the worst actors when it comes to abusing consumers – must be subject to the consumer body’s power.
Those goals largely mirror key goals of consumer groups who strongly support the stand-alone CFPA, though advocates also want the consumer body to have enforcement power as well.
That Dodd would scrap the CFPA has all along been a strong possibility, and many analysts saw its death more likely after Dodd announced he would not run for re-election. The legislation faces a much better chance of passing the full Senate if it is bipartisan, and the CFPA is the biggest partisan obstacle to gaining significant Republican support.
Indeed, if a CFPA stays in there’s a good chance not a single Republican would support the legislation. Several moderate Democrats on the banking committee such as Mark Warner (D-Va.), Jon Tester (D-Mont.) and Tim Johnson (D-S.D.) have also expressed concerns about a new, separate consumer agency. The inclusion of CFPA would set the Senate, already exhausted after the grueling partisan battle over health care, on a trajectory toward yet another 60-vote showdown.
Key members of the banking committee have been working in two-man bipartisan groups on aspects of the legislation. Several of the groups have made significant progress toward reaching bipartisan agreement on key issues, participants say.