By Silla Brush - 01/21/10 02:00 AM EST
Senate Minority Leader Mitch McConnell (R-Ky.) plans to huddle with Banking Committee Republicans Thursday to craft a way forward on financial regulatory reform, two industry sources said.
The Senate Banking Committee has been working mostly behind the scenes to draft a proposal that could gain bipartisan support. Committee Chairman Sen. Chris Dodd (D-Conn.) and ranking member Sen. Richard Shelby (R-Ala.) have been working on many of the largest and thorniest aspects of the debate, but they have yet to unveil a compromise.
The House passed legislation in December that would impose a range of new restrictions on the industry, but the Senate committee has yet to begin marking up legislation. The biggest sticking point remains the creation of a new Consumer Financial Protection Agency (CFPA), which Republicans adamantly oppose.
Sen. Mike Johanns (R-Neb.), who serves on the committee, said earlier on Wednesday that he believes the Republican win of the Massachusetts Senate seat would alter the terms of the regulatory debate.
"This bill never did have a chance of passing without bipartisan support," Johanns said at the U.S. Chamber of Commerce. The chamber and the broader financial industry have lobbied aggressively against the CFPA proposal, which remains a key goal for the president, consumer advocates and leading House and Senate Democrats.
The House passed legislation in December that included the new agency, although industry lobbyists pushed repeatedly for carve-outs and exemptions for various banks and industries.
Johanns outlined his opposition to the CFPA proposal, arguing it would drive up costs on consumers and create an agency with a "potential power grab over the nation's economy."
Congressional aides and industry lobbyists have talked about scrapping the new independent CFPA and replacing it with a beefed up division over consumer protection at a bank regulator.