WASHINGTON — Republican Sen. Bob Corker's decision to negotiate directly with Senate Banking Committee Chairman Chris Dodd on regulatory reform may boost the chances of reaching a bipartisan bill, but does not clarify how critical unresolved issues will be worked out.

In an interview Thursday, Corker said he is optimistic a deal is within reach, but acknowledged his concerns track those of the committee's lead Republican, Sen. Richard Shelby. The Tennessee Republican said he has persuaded Dodd to table some of those issues, including how best to strengthen consumer protections, while other reforms are worked out.

"One of the things I talked to Chairman Dodd about this morning is I would prefer, and he has agreed with this, is let's move consumer protection off to the side right now," Corker said. "Let's focus on all the other sort of technical issues that need to be dealt with that really affect the industry — whether it's derivatives, whether it's resolution, who's going to regulate who, those kinds of things — and let's save consumer protection to the last issue that we deal with."

Corker said his discussions with Dodd had been productive, and that he believes a consensus can be reached.

"Just in talking with Senator Dodd, I still believe there is a way to reach a bipartisan agreement on all the issues, and obviously that's what I came here to try to do," he said. "I'm going to put my best effort into doing that, and I hope that there will be numbers of people on both sides of the aisle to jump in."

Corker said the main thing he brings to the table that Shelby did not is a desire to reach a deal. He noted that he was one of several senators who urged Dodd in November to scrap his original bill and craft a bipartisan compromise. But so far negotiations with Shelby have failed to bear much fruit.

"They both began writing their own bills," Corker said. "Obviously that leads towards a potential legislative train wreck … they have broken apart. They aren't negotiating. They are writing their own bills, and I just think a better course of action is to try to negotiate a bill that is done by both sides."

While a commitment to compromise is a hopeful sign for regulatory reform, more questions than answers remain on how Corker and Dodd can sort through the substance of the issues and reach a compromise.

After the Dodd-Shelby talks broke down last week, Shelby said "there are two bedrock principles on which I will not compromise: the safety and soundness of the financial system and taxpayer protection against bailouts." In the interview, Corker said he agrees with Shelby on those issues.

"I've listened to everything that Shelby has said about consumer protection, and candidly I don't see any difference at all on our point of view," Corker said.

For example, Corker said that, like Shelby, he opposes the creation of an independent consumer financial protection agency.

"An independent agency is a nonstarter for my side of the aisle, and candidly I think for a number of Democrats, too," he said. "And we recognize, and all the good actors in the financial industry understand, that we've got to focus more fully on consumer protection. But we've got to figure out a way that there is a balance there."

Dodd has already signaled a potential compromise: putting a consumer protection division within the Treasury Department or one of the banking regulators. But questions remain over how much power that division would have, including its rulemaking authority. According to sources, talks between Dodd and Shelby broke down in part because the Alabama Republican feared the division would mean that consumer protections would trump safety and soundness.

Corker voiced a similar concern, but appeared optimistic it could be worked out.

"What you don't have is consumer protection trumping the safety and soundness of our financial institutions," Corker said. "I think there is a strong desire to seek a balance there and work it out in a way that is appropriate."

Shelby has also been adamant that the legislation end taxpayer-funded bailouts — a position Corker enthusiastically endorses. He said his work with Virginia Democrat Sen. Mark Warner has been focused on accomplishing that goal. "The goal of the Corker-Mark Warner efforts is to expunge from the American vocabulary that any company is too big to fail and to also expunge any thought that the American taxpayer is going to be used to bail out companies that fail," Corker said.

Whether Corker shares Shelby's zest to restrain the Fed is unclear. Asked about whether the Fed should be stripped of its supervisory powers, Corker declined to take a position. "There are certainly pros and cons on both sides of that," he said in the interview.

Tennessee bankers were happy to see their senator take on an elevated role in the reform debate.

"I have found him to be a very fair guy who is very serious about digging down into the issues," said Tommy Whittaker, the president and CEO of Farmers Bank in Portland, Tenn. "I have all the confidence that if the bill gets done it is going to be something that is going to be fair."

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