By: Victoria McGrane

October 19, 2009 04:53 AM EST

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After the Treasury Department released its legislative draft for financial regulation reform in July, administration officials contacted Senate Banking Committee Chairman Chris Dodd to set up a briefing.

But the Connecticut Democrat caught them short by insisting it be a bipartisan affair, with Sen. Richard Shelby (R-Ala.) and his staff included.

And so it went all summer, with Treasury officials going through the draft proposals line by line, through all 13 titles. The sessions sparked lively debate, with both Dodd’s and Shelby’s staff pushing administration officials to defend the choices they’d made, administration sources recalled.

Although a Senate reform bill has yet to emerge, extensive interviews by POLITICO found that the marquee players who will emerge in both the Senate and the House during this fall’s debate on regulatory reform have been negotiating and hashing out ideas for months.

It’s a process that is notably different from the partisan path of health care reform. It’s also distinct in that the White House has led, rather than lagged behind, the legislative writing process. Rep. Barney Frank, Dodd and Treasury Secretary Timothy Geithner, for instance, put their heads together from time to time, as they did Sept. 22 in Dodd’s Senate hideaway office.

The behind-the-scenes coordination could significantly improve the chance of reform’s passing by year’s end and delivering to President Barack Obama the first real bipartisan victory of his term.

Many sessions have dragged into the wee hours of the morning, hours-long conference calls are a norm and Pizza Pino has become a favorite Treasury haunt, since it’s the only restaurant open late within a four-block radius of the building.

Dodd and Shelby talk about regulatory reform on a nearly constant basis, both men say, and their staffs are deep in discussions. Dodd hasn’t gotten down to hashing out legislative details with newly appointed Senate Agriculture Committee Chairman Blanche Lincoln (D-Ark.), but her committee staff, which shares jurisdiction over some portions of the reform bill, did attend all the briefings.

Both Dodd and Shelby also meet regularly with their respective members on the committee, and Dodd said he meets with Republicans as well as his team of Democrats.

Talks with his Democratic members allow him to keep them up to date, “so I’m not going off on my own,” coming back and “surprising them with anything,” Dodd said.

Dodd also asked many of his Democrats to assume responsibility for certain subject areas. Sen. Jack Reed (D-R.I.) was tasked with delving into rating agencies and derivatives, Sen. Chuck Schumer (D-N.Y.) has taken on corporate governance, and Sen. Mark Warner (D-Va.) is working on the asset management side of the debate.

And many of Dodd’s Democrats are already working on the issues with their Republican banking colleagues. “It’s good politics for people to be invested in a major part of the legislation but also in terms of people feeling a sense of ownership in what you’re producing, rather than being told, ‘This is what the chairman’s mark is. Take it or leave it,’” Dodd said.

On the House side, Republicans have not been a presence at Frank’s negotiating table — not only because Democrats don’t need Republican votes to get things done in the House but also because, Frank’s staff says, Republicans on Frank’s committee haven’t shown signs of wanting to compromise.

“They are absolutely, 100 percent ideologically opposed to what we are doing,” said Frank spokesman Steve Adamske.

So the House effort has been dominated by negotiations between the two ends of Pennsylvania Avenue. When Frank released his initial draft of legislation creating a new watchdog for consumer financial products — a cornerstone of the administration’s proposed reform — the consumer protection team and general counsel at Treasury pored over the document until 3:30 the next morning.

In advance of last week’s markup of the consumer watchdog, Assistant Treasury Secretary Michael Barr and his team held four-hour conference calls on both Saturday and Sunday of the Columbus Day weekend and worked on the Monday federal holiday as well.

Frank has made significantly more headway with his Agriculture Committee chairman, Rep. Collin Peterson (D-Minn.), than Dodd has.

Frank and the folksy former accountant and farm state champion have been working out details since at least early June, when the pair told Geithner over dinner that he needed to back off a proposal to merge the Securities and Exchange Commission with the Commodity Futures Trading Commission.

Peterson’s panel oversees the CFTC and the futures contracts it regulates. The administration plan would have stripped the Agriculture Committee of its influence over the global economy — and its members’ ability to collect campaign contributions from the financial industry.

Peterson made clear first to Frank, then to Treasury, that the plan would spark a massive turf battle that would bog down the overall bill.

Since then, Peterson and Frank have been in close contact on the derivatives portion, trying to make their bills as similar as possible. Both committees will pass their own versions, and the chairmen will hammer out the differences before a single derivatives bill moves to the House floor next month.

Frank and Dodd are also hoping to pass legislation that closely tracks each chamber, which could speed the work of a final conference committee charged with hammering out one final bill for passage.

“We’re trying to get as close as we can,” said Dodd. “We have on so many bills already. So I’m not worried about that aspect of it.”