Financial regulation in America: Another fine mess - with Republicans blocking every proposal to protect consumers

With health-care reform stalled, the White House would dearly love to see Congress approve an overhaul of financial regulation. But as Washington, DC, struggles with snowstorms, a chill has descended on relations between Democrats and Republicans on the Senate Banking Committee, which has the job of shepherding through a mega-bill on financial reform, a version of which passed the House of Representatives in December. On February 5th Christopher Dodd (pictured left), the committee’s Democratic chairman, said he was giving up on two-month-old bilateral talks with its top Republican, Richard Shelby (pictured right), after reaching an “impasse”. Mr Dodd apparently called it a day after making several concessions but receiving little in return.

The window for reaching a cross-party consensus is closing fast. As winter turns to spring, senators will begin to focus more on the November mid-term elections than on outstanding legislation. Mr Dodd may have little more than a month to get a deal before attention turns elsewhere. There is a “real chance” of the bill still being stuck in the Senate this time next year, thinks Tom Pax at Clifford Chance, a law firm. If it is, Mr Dodd’s successor on the committee—he retires this year—may try to break it into more digestible pieces.

The main sticking-point is a new consumer-protection agency, which would write rules for products such as credit cards and mortgages. A key part of Barack Obama’s reform agenda (and of the House bill), this is opposed by banks and many Republicans.

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