Senators Near a Deal for a New Consumer Finance Watchdog

Top senators from both parties were closer to breaking a logjam on broader financial regulatory overhaul after agreeing to the creation of a new consumer-protection division within the Federal Reserve, according to media reports Tuesday. The new entity would have autonomous power to write regulations governing everything from credit cards and overdraft fees to payday loans and mortgages, the Associated Press reported.

Christopher Dodd (D-Conn., pictured), who heads the Senate Banking Committee, and Bob Corker (R-Tenn.) were conferring with other members of their parties Monday night in an effort to build consensus that would allow stalled regulatory reform to proceed, the AP said.

The White House originally pushed for a freestanding Consumer Financial Protection Agency, and the House voted in December to create such a regulatory body. But lack of bipartisan agreement in the Senate has since stalled progress. The financial services industry has opposed the creation of separate agency.

In an effort to move the stalled process along, Treasury Secretary Timothy Geithner last week called a meeting with representatives of the U.S. Chamber of Commerce and the American Bankers Association, among other groups, warning them that failure to pass new financial regulations could destabilize the markets.