Senate Banking Committee chairman Christopher Dodd, who said Friday he plans to move forward with a massive financial regulatory reform bill without Republican support, told federal regulators that he wants the bill to include language that would give the Municipal Securities Rulemaking Board oversight of pension fund placement agents.

In a Feb. 2 letter to the Securities and Exchange Commission, the Connecticut Democrat urged the SEC not to impose a blanket ban on pension fund placement agents as called for in an August SEC proposal that aims to limit pay-to-play activities among investment advisers for states and localities.

Instead, Dodd recommended the SEC regulate pension fund placement agents the way a draft of his financial regulatory reform bill would regulate municipal market financial advisers and other market intermediaries: through mandatory SEC registration coupled with proscriptive rules of conduct set by the MSRB.

“This approach,” Dodd said in the two-page letter, “would enable the commission to monitor the activities of placement agents and of the municipal advisers. It would also increase transparency and disclosure in the marketplace, and prevent the abuse targeted by the commission’s proposed rule without prohibiting what many in the municipal securities market describe as useful and legitimate practices.”

Though the letter does not specifically mention the MSRB, market participants said that its reference to the municipal securities provisions in Section 975 of his draft Restoring American Financial Stability Act suggests he is talking about giving the MSRB authority pension fund placement agents.

The same section of the bill would also alter the board’s composition to ensure that a majority of its 15 members are public, and would give the MSRB authority over currently unregulated financial advisers, guaranteed investment contract  brokers, third-party marketers, placement agents, solicitors, and swap advisers. A financial regulatory reform bill that passed the House in December would also make the MSRB a majority-public self-regulator, but would give the SEC regulatory authority over third-party intermediaries.

Meanwhile, on Friday Dodd indicated that even though he has reached an “impasse” in negotiations with ranking Republican member Sen. Richard Shelby of Alabama, he expects his committee to begin to consider a redrafted regulatory reform bill by the end of February.

“I have instructed my staff to begin drafting legislation to present to the committee later this month,” Dodd said in a statement. “While I still hope that we will ultimately have a consensus package, it is time to move the process forward.”

His remarks come a couple of months after the committee split up negotiations over the most high-profile aspects of the legislation among four bipartisan groups of senators. Dodd said those discussions were productive and that he intends “to incorporate many of those agreements in this new proposal.”

Sen. Bob Corker, R-Tenn., who was working with Sen. Mark Warner, D-Va., on key parts of the legislation tied to systemic risk and resolution authority for orderly unwinding of failed financial institutions, said while he is disappointed by the impasse, “it won’t alter my efforts toward a bipartisan bill.”

In a separate statement, Warner said he has “every confidence” he will generally be able to achieve bipartisan agreement with Corker.

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