Senator Christopher Dodd, chief negotiator for the Democrats in Senate talks on financial regulation reform, said on Friday he was uncertain whether bipartisan support for a compromise bill could be achieved.

With one of the Obama administration's top domestic policy priorities in the balance, Dodd sounded wary but hopeful following weeks of discussions that have snagged on a proposal to create a new financial consumer watchdog.

While we do not have a bipartisan agreement yet at all, we're getting there, we're trying. I don't know if it will happen or not, Dodd said in remarks on the Senate floor.

I'm optimistic it can happen, but I've been around here long enough to know these things can fall apart very easily. It's fragile, it's complex ... It's one of the hardest tasks I've ever been asked to undertake, he added.

Embracing most of the recommendations for tighter bank and capital market regulations made in mid-2009 by President Barack Obama, the House of Representatives in December approved a bill proposing the biggest U.S. regulatory changes since the 1930s.

But the Senate has yet to act and almost a year and a half since a severe banking crisis tipped the U.S. economy into a deep recession, financial regulation has changed little.

If the Senate can produce a bill, Representative Barney Frank said in a CNBC interview on Friday he would like to have a public conference between House and Senate to work out a final measure to send to Obama to be signed into law.

Frank said it would be a terrible mistake if the reforms that resulted led to creation of a financial consumer watchdog whose rules could be vetoed by a bank regulatory agency.

DODD SEES ENDING BAILOUTS AS TOP GOAL

The Senate bill's top goal, Dodd said, will be ending too-big-to-fail bailouts, like the 2008 taxpayer-backed interventions to prop up financial giants such as American International Group Inc and Citigroup Inc .

With a political backlash from those rescues looming as an issue in congressional elections in November, Dodd said the Senate bill would also create a new, more orderly process for dismantling troubled firms that avoids future bailouts.

He listed regulation of the $450 trillion over-the-counter derivatives market, including credit default swaps, as another primary objective, which he has said must be included in the bill.

In a sign that at least one section of a draft bill that he unveiled in November could fall out of the final Senate measure, Dodd said more work remains to be done on proposals to rein in crazy financial industry compensation packages.

Frank told CNBC it would be a problem if the Senate bill did not contain a provision of the House bill that calls for requiring brokers to meet the same fiduciary duty standard of client care followed by investment advisers.

As for Obama's proposed Consumer Financial Protection Agency to regulate mortgages and credit cards, Dodd said there was no agreement on the independence and authority it should get, and on where to place it in the government.

CFPA THREATENS BANK PROFITS

Banks, credit card firms and mortgage lenders would be subject to regulation by the CFPA, which could directly threaten their profits if it mandated sharp reductions in high fees and interest rates charged to consumers.

Republicans oppose making the watchdog an independent agency, but have said they could live with it as a unit of a banking regulator. Dodd has been discussing putting it in the Federal Reserve as a possible compromise.

But some Republicans also want the agency in which the watchdog is housed to have veto power over any rules it writes -- a position that Democrats have been unwilling to accept.

That will not be part of this, Dodd told reporters late on Thursday in a hallway outside his Capitol Hill office after he briefed fellow Democrats on the status of negotiations.

He also said that senators' staffs would be working through the weekend on negotiations toward a bill.

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