Key senators pushed for a bipartisan agreement on a package of reforms to tighten rules for financial industry behavior as President Barack Obama on Wednesday blasted critics who call his policies socialism.

Negotiations for some kind of Senate pact, possibly ready by early next week, seemed to be building as Senate Banking Committee Chairman Chris Dodd and Republican Senator Bob Corker of Tennessee met Treasury Secretary Timothy Geithner.

We're working, a lot of members are, the door's open, Dodd told reporters after addressing the Credit Union National Association. A spokeswoman said later it seemed likely a bill setting out reform proposals will be ready next week.

A Treasury official, speaking on Wednesday evening after the Geithner met the two senators, said Geithner was pleased that banking committee members were working together to craft a strong bill but gave no details about specific issues discussed.

Obama, speaking to the Business Roundtable, a lobby group for top executives including Wall Street titans, sought to defuse some opposition to reform that he claimed was grounded in a misrepresentation of administration objectives.

We have arrived at a juncture in our politics where reasonable efforts to update our regulations, or make basic investments in our future, are too often greeted with cries of 'government takeover' or even 'socialism,' Obama said, adding he was an ardent believer in the free market.

The House of Representatives already has passed a regulatory reform bill that would to rein in risky practices by financial firms blamed for driving the U.S. economy into severe recession in 2007 and triggering a global downturn.


After a Senate effort to draft its own bill temporarily stalled earlier this month, Dodd and Corker have teamed to revive the bid for a financial reform bill. Any Senate eventually would have to be reconciled with the House version.

Dodd sounded cautiously upbeat on Wednesday when asked how soon he and Corker could come to agreement. I won't state any timetable at all; we'll get something soon, he said.

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 about a new bureaucracy.


The banking sector has largely recovered from the 2007-2009 financial crisis, posting rising 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.

The bill passed by the House 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.

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 favors 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.

Federal Reserve Chairman Ben Bernanke, in testimony before the House Financial Services Committee on Wednesday, skirted the question whether the Volcker rule would effectively force banks onto a more responsible course of action in future.

The Volcker rule might be appropriate, Bernanke said, but warned of the need to ensure it didn't inappropriately impinge on banks' ability to manage risk.

He suggested that one option might be to give regulators authority to decide whether banks were engaging in such risky activities that they were endangering the financial system and, if so, ban them from doing so.

The Treasury Department has said that mandatory limits should be put on proprietary trading by banks without specifying details. The Senate committee is widely expected to propose a watered-down version of the Volcker rule, something less than an outright ban on proprietary trading.

(Additional reporting by Karey Wutkowski, editing by Leslie Adler)