Dodd and Corker take lead on financial reform

Sen. Chris Dodd (D-Conn.) said Thursday he would negotiate directly with Sen. Bob Corker (R-Tenn.) to craft a bipartisan financial overhaul package.

Corker, a freshman senator, has emerged as a leader on banking issues since the financial crisis erupted.

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Dodd's announcement comes less than a week after he said negotiations with Sen. Richard Shelby (Ala.), the top Republican on the Senate Banking Committee, had reached an "impasse." Dodd said then that he would draft overhaul legislation by the end of February.

Dodd said he called Corker on Tuesday night to help negotiate an overhaul package, one of President Barack Obama's top domestic priorities. The House passed a package of new regulations in December, but action in the Senate has been bogged down.

“I am more optimistic than I have been in several weeks that we can develop a consensus bill to bring about the reforms the financial sector so desperately needs to prevent another economic crisis," Dodd said in a statement on Thursday.

Corker has been outspoken on the need create a new system to dissolve failing financial firms so they don't threaten the economy and require massive bailouts.

"I'm just one senator and I would certainly never say I could replace Sen. Shelby, someone I respect and like a lot," Corker said on CNBC. "But I am stepping forward as a Republican senator saying this is a piece of legislation that needs to be passed."

He has supported a stronger bankruptcy code as the main way to handle failing firms. Corker and Sen. Mark Warner (D-Va.) worked together on how to dissolve those firms and on how to improve oversight of risks that threaten the broader financial system.