It was supposed to be the week the House Financial Services Committee passed a key part of regulatory reform and the Senate Banking Committee finally began moving forward on its ambitious overhaul plan.

Instead, it was the week that regulatory reform took a significant step backward.

In the Senate, Chairman Chris Dodd was forced to abandon any timetable and return to the drawing board for his massive reform bill after panel members from both sides insisted he take a bipartisan approach.

In the House, a panel vote on legislation to give the government oversight powers of systemically important institutions was delayed until after Thanksgiving. The legislation also picked up a controversial amendment that could destroy the Federal Reserve Board's independence.

While the reform effort has always been a slog that was expected to go into next year, the new hurdles indicate it could be even more difficult than originally expected — and that it may be in jeopardy of not passing at all.

"The train is off the rails in reg reform," said Phillip Swagel, a professor at Georgetown University and former Treasury assistant secretary for economic policy.

Dodd's introduction of a 1,139-page regulatory reform bill on Nov. 10 was a gamble designed to build momentum for an overhaul. In an interview last week, the Connecticut Democrat made it clear he was prepared to push through the bill along party lines if he had to.

But the game plan quickly changed Thursday as debate began on the bill and several Democrats objected to taking a partisan approach. As a result, Dodd scrapped a planned vote for the second week of December, and said he would restart negotiations with committee members from both political parties.

Dodd defended the switch by saying his deadlines were intended to move the process forward.

"Particularly in the Senate, you have to lay things down to get things moving, to get people to come to a table to decide to make decisions," Dodd told reporters. "I had set out some deadlines earlier because you have to move."

Dodd also made it clear that he was open to changing most anything in his bill, even its cornerstone — a provision to consolidate existing federal agencies into a single prudential banking regulator. "It's a discussion draft," he said. "It's one idea. And there other ways of doing this. This is not a question of being locked down. There is nothing written in here in concrete."

During the hearing, Dodd appeared somewhat surprised by the reaction to the bill. Some Democrats expressed tepid support for the legislation while others objected to multiple sections of it. Many colleagues urged Dodd to take a bipartisan approach.

Though the Banking Committee is normally reserved and disputes are often resolved in private, Sen. Richard Shelby, the lead Republican on the panel, ripped into virtually every facet of Dodd's legislation, saying it was poorly constructed.

Mark Calabria, a former aide to Shelby, said that Dodd will have to become more engaged if he wants to get a bill enacted. "Dodd has to be personally involved in the process now. This entire delegation of leaving it all to staff is going to have to change," he said. "It's obvious he doesn't have the support of his own side. This recessed the entire process. The level of discomfort with all of this seemed pretty widespread. I almost feel he's going to have to start from square one."