Maybe before elected officials actually try to undertake reform of financial markets they should have a look at their own process for instituting reform and make a few changes there because, at this point, they seem to have more problems than Wall Street.

In the latest development in the ongoing saga of how to prevent the events of 2008 from happening once again, Bloomberg reports that talks have broken down between Senate Banking Committee Chairman Christopher Dodd (D-CN) and Bob Corker (R-TN) with Dodd now planning to go forward with his own bill.

Corker agreed to work with Dodd after talks broke down in February between Dodd and Senator Richard Shelby, the top Republican on the committee, over consumer protection issues. The bill is aimed at strengthening Wall Street rules to prevent a future financial crisis and a repeat of taxpayer bailouts of firms like American International Group Inc. and Citigroup Inc.

Dodd will release a “substitute” of legislative language he offered in November, which called for creating a stand-alone Consumer Financial Protection Agency and a national bank regulator in the merger of four agencies.

The new Dodd bill will include some elements negotiated with Corker. For example, it won’t propose the stand-alone agency, which Corker opposed, and will probably put the consumer unit in the Federal Reserve with an independent budget, a director appointed by the president and some enforcement powers, according to a person with direct knowledge of the plan.

The last paragraph notes that, tomorrow, the Federal Reserve’s Consumer Advisory Council is expected to announce their opposition to leaving the consumer protection function within the central bank where it has been for many years (with little protection provided).

So, the Fed does not want to be the fox that watches the hen house?