WASHINGTON, USA - The top Republican on the U.S. Senate Banking Committee wants a bipartisan financial reform deal, but opposes creating a new consumer protection agency and sees other key issues as open to debate, an aide told Reuters on Monday.

Senator Richard Shelby supports stronger consumer protections 'where appropriate, but believes the creation of a stand-alone agency is neither necessary nor wise,' said Jonathan Graffeo, spokesman for the Republican senator.

Senator Christopher Dodd, a Democrat and chairman of the banking committee, welcomed an Obama administration proposal to set up a Consumer Financial Protection Agency to regulate mortgages and credit cards - one of several reform proposals that must be handled by the banking committee.

The new agency would strip existing bank regulators, such as the Federal Reserve, of their consumer protection duties and centralize them.

In Shelby's judgment, 'divorcing consumer protection from prudential regulation would make the system less safe,' Graffeo said. But the consumer agency is not the only unresolved issue.

Shelby sees more room for debate on derivatives regulation, overseeing systemic risk, and bank supervision, Graffeo said.

Dodd was expected to unveil draft financial reform legislation soon, but final action in the Senate was unlikely until next year, analysts and Senate aides said.

'Comprehensive bank regulatory restructuring legislation is likely to be introduced in the next few days, but we continue to believe that completion of the issue will likely be in 2010,' said financial services policy analyst Brian Gardner at investment firm Keefe Bruyette & Woods.

SENATE MOVING SLOWLY

Despite progress in the House of Representatives, financial reform is moving slowly in the Senate and faces daunting political obstacles, analysts said.

More than a dozen proposals have been sent to Congress by the administration, with most meeting resistance from lobbyists for banks and financial services firms.

A bill focused on a single bank supervisor, possibly accompanied by proposals on handling systemic risk and 'too big to fail' firms, may come soon from Dodd, analysts said.

'We do not believe that there is broad bipartisan support for whatever Senator Dodd will introduce,' Gardner said.

The bill that is expected to be released soon in the Senate will not be a bipartisan venture, said a source familiar with discussions at the committee level.

'This will be a Democratic bill,' the source said.

Congressional Democrats and the Obama administration want to overhaul financial regulation to prevent a repeat of last year's financial crisis.

The House Financial Services Committee is expected to approve a bill on Tuesday that would beef up the U.S. Securities and Exchange Commission, as well as strengthen certain standards for investor protection.

Later this week, the House committee is slated to debate and vote on a landmark bill, proposed last week by President Barack Obama, on systemic risk and large financial firms.