Christopher Dodd, chairman of the Senate Banking Committee, last week unveiled his long-awaited financial overhaul plan, a first draft of a gigantic omnibus bill he plans to formally introduce in the next couple of weeks. Dodd aims to tackle nearly every weak spot that contributed to the past year's economic crisis. But while the eventual bill his committee passes may be just as ambitious, the specifics contained in Dodd's version were, in Washington parlance, dead on arrival.

Who provided this cynical diagnosis? Dodd himself. As he presented his discussion draft last week, Dodd said that later this month he hopes to be back with a version that can actually pass the Senate. "I hope to be standing here with a consensus bill," he said at a Capitol Hill press conference.

The current iteration of Dodd's plan is much bolder than the financial revamp measures drafted by his House counterpart, Financial Services Committee Chairman Barney Frank, working in conjunction with the Obama administration. Dodd calls for the merger of the four federal banking regulators into one all-encompassing Financial Institutions Regulatory Administration that would oversee every depository institution. The Federal Reserve Board and Federal Deposit Insurance Corp. would remain independent agencies but would lose their bank supervisory duties. The Fed would continue to conduct monetary policy, act as lender of last resort and oversee the payments system.

The FDIC would continue as the insurer of bank deposits. The new agency would entirely consume the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

Dodd also would create an Agency for Financial Stability to oversee large financial conglomerates and set rules on capital, leverage, liquidity, risk management and other requirements on companies that pose risks to the financial system. The agency would have the authority to break up large, complex companies if they pose a threat to U.S. financial stability.

His approach contrasts greatly with Frank's, which assigns these new supervision duties to a council of existing regulators and expands the Fed's power over nonbank financial companies. The Connecticut Democrat's approach isn't far off from the Bush Treasury Department's March 2008 recommendations, but these dramatic steps were deemed too politically difficult by the Obama White House.

Although he acknowledged the near-impossible task of seeing his plan make it through the Senate intact, Dodd insisted that starting out with a compromise would be a "huge mistake" that would deflate popular sentiment for sweeping change. "You're given very few moments in history to make this type of difference," he said.

Dodd, particularly, may have few more of those moments. He faces a tough re-election. Opinion polls now show him trailing the front-runner for the Republican nomination, former U.S. Rep. Rob Simmons, by 5 percentage points. Though his poll numbers are increasing, Dodd's re-election chances were tossed into disarray by revelations about his dealings with the financial industry.

While smaller institutions expect a bare-knuckled fight, big institutions think Dodd will strike a deal with them. "Any proposed legislation, including that of Senator Dodd's, will have long-term economic ramifications and should establish a regulatory environment that will continue to promote capital formation, the opportunity to grow savings, and drive innovation and entrepreneurship," said Kenneth Bentsen, executive vice president of the Securities Industry and Financial Markets Association in a noncommittal statement.

The American Bankers Association and the Independent Community Bankers of America, on the other hand, dished vitriol on the two core components of Dodd's plan -- creating a single regulator and establishing a new agency to oversee consumer financial protection.

"Community banks," said ICBA in a statement, should not be "unduly burdened for the sins of unregulated entities and out-of-control Wall Street firms."

Among the likely compromises, one industry source predicted that the Fed will ultimately retain some banking supervision duties, possibly just over the largest holding companies.

Once the Fed's powers are addressed, the differences between the House and Senate plans will pose little difficulty, making enactment of a broad plan likely. Says one industry source: "They agree more than disagree, and where they do disagree, there isn't tons of daylight."