There’s a certain amount of suspense these days in our nation’s capital about what’s going to happen not only with health care reform, but also financial regulations.

The House managed to pass a sweeping bill in December overhauling many aspects of the financial regulatory structure, including the creation of a Consumer Financial Protection Agency, regulation of some types of over-the-counter derivatives, and the establishment of a Financial Stability Council that would subject systemically risky financial institutions to increased oversight (see House Passes Financial Regulatory Reform Bill). The financial industry, as well as the AICPA, lobbied for changes and exemptions in the bill, and what emerged was a far cry from some of the original proposals by the Obama administration. Still, the legislation was approved on a party-line vote, but even before it was passed the Senate was at work on a radically different version.

However, the bill that Senate Banking Committee Chairman Christopher Dodd, D-Conn., and his counterpart, ranking member Richard Shelby, R-Ala., have been trying to hammer out now appears to be very much in doubt. Shelby has refused to accept the creation of a Consumer Financial Protection Agency, arguing that it would only become another government bureaucracy. A compromise that had emerged of subsuming the consumer protection function within another agency such as the systemic regulator also apparently did not get very far. The CFPA is seen as threat number one by the financial industry, but even with that phantom knocked aside, the prospect of increased regulation is reflexively opposed by many banks and financial services firms, despite the government’s bailout of the financial industry.

Now Shelby and Dodd have reportedly reached an “impasse” in their joint efforts to produce a bipartisan financial regulatory reform bill in the Senate. Dodd said Friday that he has instructed his staff to draft its own version of the bill in order to move the process forward.

President Obama has been resorting to meetings and face-to-face confrontations with the Republican leadership in Congress in an effort to break the logjam on his legislative priorities, but he appears to be running out of patience. On Tuesday, he conducted an impromptu press conference after meeting with congressional leaders in both parties, and he plans to host a summit on Feb. 25 to make progress on at least health care reform.

“I’m willing to move off some of the preferences of my party in order to meet them halfway, but there’s got to be some give from their side as well,” he said. “That’s true on health care, that’s true on financial reform. That’s what I’m hoping gets accomplished at this summit.”

Here’s hoping for some progress and a lot less posturing on both sides of the political fence.

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