Has President Obama’s plan to create a new consumer financial protection agency died on Capitol Hill? That may turn on whether two key senators can make a deal.

Over the last several months, the Investigative Fund has been tracking the agency's topsy turvy journey through Congress. The House in December narrowly approved a bill that would create an independent agency – the CFPA -- to oversee and write rules for consumer credit products such as mortgages and credit cards.  Now the Senate Banking Committee is working on its own version of financial regulatory reform.

The panel’s ranking Republican, Richard Shelby of Alabama, has argued that a new, fully independent CFPA would create an unnecessary bureaucracy.  Speaking to reporters on Tuesday he seemed to leave the door open for a new consumer office to live within an existing regulatory agency.

A scaled-back plan would please the banking industry as well as some federal regulators such as the Federal Reserve, whose chairman Ben Bernanke has spoken out against a new independent agency.

But many Democrats and consumer groups say that Obama’s plan would be toothless if lumped into the duties of an existing financial regulator, such as the Fed or Treasury Department. After all, consumer advocates say, these regulators failed to prevent the current financial crisis. They also are primarily concerned with the safety and soundness of financial institutions -- not protecting consumers.

Senate Banking Chair Christopher Dodd (D-Conn.), said Tuesday that he still backs the idea of a new independent agency. But Dodd said he needed some Republican support to pass the legislation, implying the CFPA might not survive the process.

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