Marathon negotiations in the US Senate on financial regulatory reform were set to continue Sunday with a renewed focus on financial consumer protections after key Republicans rejected a compromise offer from the banking committee chairman. Sources told Reuters Saturday night that neither Democrats nor Republicans had embraced an offer made on Friday by Democratic Senator Christopher Dodd to scale back President Barack Obama's proposed Consumer Financial Protection Agency (CFPA). The consumer watchdog idea remained a stumbling block to a bipartisan agreement on tightening bank and capital market oversight, a top domestic policy priority for Obama. Dodd had circulated a proposal to make the CFPA a division of the Treasury Department, instead of an independent agency, which the president recommended in mid-2009 and which the U.S. House of Representatives has endorsed. But in a setback for Dodd, his offer has been rejected by the banking committee's top Republican, Senator Richard Shelby, and fellow Republican Senator Bob Corker. The sources said Shelby and Corker objected to the rule-writing power Dodd proposed for the consumer division, but not necessarily to the idea of the division itself being located in the Treasury Department or another federal agency. On the opposite side of the contentious consumer watchdog issue, many Democrats were still holding out for an independent CFPA, said lobbyists and aides close to the talks. “In our view, this language will change considerably before the bill advances to the floor of the Senate,” said Jaret Seiberg, financial services policy analyst at investment advisory firm Concept Capital. The struggle in the Senate suggested to some that new legislation -- still expected by many from Dodd next week -- may be narrower in scope than Obama's proposals of nine months ago, and a sweeping bill passed by the House in December. “They're going to push real hard to get something out next week,” said Brian Gardner, a policy analyst at investment firm Keefe Bruyette & Woods.
