By Jim Kuhnhenn, ,Associated Press Writer
WASHINGTON (AP) — More than a year after Lehman Brothers' collapse set off a financial panic, Senate negotiators are laboring to seal a deal over a consumer protection dispute holding up broad legislation to establish new rules for Wall Street.
At issue is whether a government consumer watchdog should be free from bank regulators to write rules that govern everything from credit card and overdraft fees to payday loans and mortgages.
Key negotiators in the Senate Banking Committee are closing in on an agreement that would house a government consumer entity inside the Federal Reserve but give it autonomous power to write regulations, three people familiar with the talks told the Associated Press.
The sources spoke on the condition on anonymity because they were not authorized to discuss the evolving talks publicly.
The idea, proposed by Republican Sen. Bob Corker of Tennessee, could break the logjam that has prevented a bipartisan bill from emerging in the Senate.
But the Banking Committee's chairman, Democrat Christopher Dodd of Connecticut, was meeting with skepticism as he tried to sell the idea to fellow Democrats on Tuesday. And the committee's top Republican, Sen. Richard Shelby of Alabama, also voiced misgivings.Shelby said putting an autonomous consumer finance regulator within the Fed would be like "moving the Department of Agriculture to the Pentagon and housing it over there and yet be autonomous.
"I don't see why that accomplishes much."
The idea would be a retreat from President Barack Obama's initial insistence on a stand alone agency, a demand that the White House has since dropped to give Dodd more room to find a compromise. But a compromise was proving elusive.