Senate Democrats may scrap their plan to establish a Consumer Financial Protection Agency as part of their financial regulatory reform package, according to media reports.

Those close to Senate Banking Committee Chairman Chris Dodd (D-Conn.) told the Wall Street Journal on Friday that Democrats could forgo their much-discussed panel in order to win Republicans' early support and advance the bill to the floor faster.

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The move would be a key concession to centrist Democrats and most Republicans, who both fear the agency would only add to the bureaucracy currently plaguing the financial oversight system.

However, the proposal's omission is conditional on Republicans delivering their own concession: An agreement to include some consumer-protection panel within another, already-existing federal agency, the Journal reported.

It is still unclear whether Senate Republicans, led by Banking Committee Ranking Member Richard Shelby (R-Ala.), will accept the deal. Shelby and a team of four Republicans have worked along side Dodd since the end of last year, trying to resolve key differences in the reform bill before it reached the markup stage.

Nevertheless, Dodd's possible concession on what has become the signature obstacle in Democrats' reform legislation is crucial.

The House's reform package, spearheaded by Financial Services Committee Chairman Barney Frank (D-Mass.), includes a tough consumer protection agency. Moreover, the proposal has long functioned as a talking point for liberal Democrats, who seek to stress their populist bona fides ahead of a tough election year.