WASHINGTON -- Eighteen months after Wall Street's brush with apocalypse, the Senate began Monday to rewrite the nation's financial regulatory rules with introduction of a sweeping bill designed to fix the causes of the deep economic crisis.

"The stakes are far too high ... for us to fail in this effort," Senate Banking Committee Chairman Christopher Dodd, D-Conn., said in introducing the Financial Stability Act of 2010.

By Mr. Dodd's calculation, the Senate ahead of midterm elections in November has no more than 70 working days to pass an overhaul and then narrow its differences with a bill the House passed in December. "We don't have many days left to actually get the job done, so we have some urgency," he said, adding that he had tried but failed to strike a compromise with Republicans, who he said still had much input into the legislation.

Mr. Dodd's legislation -- 1,336 pages in its online version -- would create new consumer protections, grant first-ever authority to dissolve large firms that the government deems a threat to the financial system and impose rules so taxpayer money won't be used again to bail out big, troubled institutions.

House Financial Services Committee Chairman Barney Frank, D-Mass., welcomed Mr. Dodd's version. "There are some differences between the House-passed bill and Senator Dodd's version, but they are more alike than they are different. I believe that we will be able to work constructively together to meet the public need for a tough, comprehensive bill," he said.

President Barack Obama also praised Mr. Dodd's bill, although he suggested that it is only a beginning. "This proposal provides a strong foundation to build a safer financial system," Mr. Obama said in a statement. "It creates a new consumer financial protection agency to set and enforce clear rules of the road and establishes stronger supervision for the largest financial firms under the Federal Reserve."

While Mr. Dodd failed to introduce a bipartisan bill, it isn't plagued by the divisive partisan strife facing health care legislation. Key Republicans pledged to keep working with Mr. Dodd.

Mr. Dodd's bill would create a Consumer Financial Protection Agency, as in the House version, but his proposal would house it within the Federal Reserve, rather than create a stand-alone agency. This agency would write rules to govern a host of consumer credit products, ranging from mortgages and payday loans to credit cards.

Significantly, this independent agency, with a leader chosen by the president and confirmed by the Senate, would get enforcement powers. Republicans, banks and the U.S. Chamber of Commerce oppose that. The new agency's rules would set a floor for consumer protection; states could adopt tougher measures.

"This would disrupt the uniform and efficient operation of the banking system, increase the cost of compliance, and potentially confuse consumers and businesses with a hodgepodge of rules and regulations," Consumer Bankers Association President Richard Hunt said in a statement. Rather than streamlining banking regulation, he said, consumers banking across state lines would be subject to different laws in different jurisdictions.

The consumer panel idea grew from writings by Harvard University bankruptcy law professor Elizabeth Warren, now head of a special Congressional Oversight Panel to oversee how taxpayers' bailout dollars are spent.

She and other consumer advocates object to parts of Mr. Dodd's approach, such as letting banks with assets under $10 billion escape the new panel's regulation and giving some veto power to financial regulators over the consumer unit. But Ms. Warren praised Mr. Dodd's bill overall.

"Despite the banks' ferocious lobbying for business as usual, Chairman Dodd took an important step today by advancing new laws to prevent the next crisis. We're now heading toward a series of votes in which the choice will be clear: families or banks," Ms. Warren said in a statement.

Gail Hillebrand, a director of Consumers Union, publisher of Consumer Reports magazine, said tougher language is still needed: "We need a government watchdog with real authority to protect consumers. Lawmakers should strengthen the Dodd proposal by making sure that the banking regulators who failed to prevent our current financial crisis can't stand in the way of needed consumer protection."

The Senate bill differs from the House version in how it would guard against risks to the broader financial system. The House bill would grant broad new powers to the Federal Reserve to police the entire financial system for risks.

Mr. Dodd's bill calls instead for a nine-member Financial Stability Oversight Council -- to be chaired by the Treasury Department, with other members drawn from other financial regulators -- to watch out for risks. It would make recommendations to the Fed for strict rules to prevent banks from growing so large that their failure would pose a risk to the financial system.

Like the House bill, the Senate's would create a fund, paid for by banks, to cover costs of dissolving large financial institutions. The House calls for a $150 billion fund; Mr. Dodd, $50 billion.

The Senate bill goes further than House legislation in attempts to rein in large, complex financial institutions. Mr. Dodd largely adopted a proposal by former Fed Chairman Paul Volcker, now an adviser to Mr. Obama, to prevent large institutions from trading in their own funds if they also trade on behalf of clients.

Washington correspondent Daniel Malloy writes the "Pittsburgh On The Potomac" blog exclusively at PG+, a members-only web site of the Pittsburgh Post-Gazette. Our introduction to PG+ gives you all the details.