WASHINGTON -- Senate Republicans said Tuesday there is no support within the GOP for the financial overhaul plan outlined last week by Democrats, putting on shaky ground a top priority for President Barack Obama.
Sen. Chris Dodd, D-Conn., chairman of the Senate Banking, Housing and Urban Affairs Committee, has outlined an 1,136-page draft bill that would create three new federal agencies to police banks, protect consumers and dismantle failing financial institutions that threaten the broader economy.
But Republicans have said they think the plan goes too far by putting onerous restrictions on Wall Street that could limit the availability of credit.
"My understanding is that it's not acceptable to any of the Republicans on the committee as it now stands," Senate Republican leader Mitch McConnell of Kentucky said.
Democrats have said they believe at least some GOP support will be needed to pass the bill. They hold a slim majority in the Senate, and some of their more conservative members might be tempted to side with Republicans if a strong case is made that the bill will hurt the financial industry, particularly neighborhood banks.
Sen. Richard Shelby of Alabama, the top Republican on the banking committee, said he was open to negotiating the proposal with Democrats but couldn't support the measure as it was written.
Among the major sticking points is Dodd's insistence that a new federal agency be created to focus on consumer protections.
Republicans and industry officials have said that creating another federal bureaucracy will put new strains on businesses and could discourage lending.
"That's a deal-breaker" among other provisions, Shelby said after briefing his Republican colleagues on the bill during a private policy luncheon on Tuesday.
Dodd spokeswoman Kirstin Brost said that the bill was a draft and ideas would be solicited from both parties.
"I would hope the Republican leadership would choose to play a constructive role in this process," Brost said.
One area of agreement among senators is that the Federal Reserve's powers should be limited. Dodd has proposed stripping the Fed of its power to regulate banks and regulate consumer products such as credit cards. His proposal also would limit the Fed's ability to provide emergency loans.
Shelby and other Republicans have said the Fed didn't do enough to prevent last year's market crisis and has grown too powerful in its ability to lend money to troubled institutions.
The House has proposed its own version of the legislation, which could be voted on as early as December.