Senate negotiations toward a bipartisan agreement on financial regulatory reform moved forward on several fronts on Wednesday and hopes were high for a pact early next week.
Senator Christopher Dodd, the Connecticut Democrat who chairs the Senate Banking Committee, said momentum was building for the sweeping legislation after it seemed to stall earlier this month over disagreements related to the powers of a consumer financial protection agency.
We're working, a lot of members are, the door's open, Dodd told reporters after addressing the Credit Union National Association.
Dodd and Republican Senator Bob Corker, of Tennessee, were scheduled to meet Treasury Secretary Timothy Geithner later in the day, presumably to try to iron out any differences between positions of the Obama administration and Republican members of the banking committee.
Hope for a revived Senate effort stems primarily from Dodd's effort to find common ground with Corker, who has indicated a willingness to work with Dodd.
A spokeswoman for Dodd, in a comment on social networking service Twitter, said financial reform talks are going well but it seemed unlikely a bipartisan Senate deal would be reached this week.
Dodd, after his address to the credit union, said, I won't state any timetable at all; we'll get something soon.
There are a number of areas in which compromises must be achieved to get a Senate bill. The Obama administration insists a Consumer Financial Protection Agency is needed -- separate from banking regulators -- to ensure that consumers are not victimized on mortgages, credit cards and other financial instruments, but Republicans are wary.
Reckless lending and lax standards by banks were blamed for causing much of the credit problems that helped drive the U.S. economy into a deep recession in late 2007. Banks have since recovered, posting growing profits and paying big bonuses to their top executives, but homeowners continue to struggle with high foreclosure rates and difficulties in getting loans.
There also is uncertainty about how extensively an administration push to ban or limit banks' proprietary trading -- effectively letting them use government-protected capital to trade for their own profit -- will be watered down by the Senate bill.
An earlier bill passed by the U.S. House of Representatives would allow, but not require, regulators to restrict proprietary trading at firms seen as a risk to the financial system's stability.
Something similar might be incorporated into the Senate bill.
President Barack Obama, who had proposed the proprietary trading ban in January, dubbed it the Volcker rule in honor after Paul Volcker, the former Federal Reserve chairman who is a proponent of separating banks' riskier trading from their less-volatile commercial banking activities and is now head of a panel that advises the White House on economic issues.
(Additional reporting by Karey Wutkowski, editing by Leslie Adler)