Nervous Senate Republicans are scrambling to regain their footing on financial regulatory reform, a top Democratic priority poised to move quickly through the chamber.

Minority Leader Mitch McConnell (R-Ky.) is working to solidify a united front within his ranks. He came out swinging rhetorically Tuesday, while privately urging his Members to stand together as bipartisan talks continue between Sens. Chris Dodd (D-Conn.) and Richard Shelby (R-Ala.), the chairman and ranking member of the Senate Banking, Housing and Urban Affairs Committee.

With both parties working to portray themselves as guardians of average Americans, McConnell and other Republicans have said the Democrats’ legislation does not address the too-big-to-fail problem in the U.S. financial system.

“We cannot allow endless taxpayer-funded bailouts for big Wall Street banks,”
McConnell said in a floor statement. “And that’s why we must not pass the financial reform bill that’s about to hit the floor.”

“The fact is this bill wouldn’t solve the problems that led to the financial crisis. It would make them worse,” he added.

House and Senate leaders are headed to the White House today for a regularly scheduled meeting with President Barack Obama, where the primary focus is expected to be financial regulatory reform. Later this afternoon, McConnell plans to brief Senate Republicans on the issue during a full caucus meeting.

With both sides revving up a messaging war that could provide fodder on the campaign trail this fall, lobbyists say the two parties are in a game of chicken over who is going to blink first on caving on regulatory reform.

“McConnell is trying to keep moderates in his camp for as long as possible,” one financial services lobbyist said.

While McConnell criticized Dodd’s bill — reported out of committee on a party-line vote last month — Republicans blasted the White House for playing politics with Wall Street reform. Sen. Saxby Chambliss (R-Ga.), who has long been in talks with Agriculture, Nutrition and Forestry Chairman Blanche Lincoln (D-Ark.) on how to regulate the derivatives industry, blamed Treasury Secretary Timothy Geithner and Commodity Futures Trading Commission Chairman Gary Gensler for forcing Lincoln to pull back on a potential deal on the issue.

“Sen. Lincoln and I are still talking and still have hopes, but it may be clear the White House doesn’t want an agreement,” Chambliss told reporters.

Asked whether a bipartisan deal might still be reached, Chambliss said: “It’s hard to say. You think you get close, and another problem comes up.”

Several financial services lobbyists, however, pointed to the fact that the details haven’t leaked about the compromise Shelby offered Dodd before the spring recess as a positive sign. They said it shows the pair might come to a final deal despite the increasingly heated rhetoric from the White House and Republican leadership.

Majority Leader Harry Reid (D-Nev.) said Dodd has tried for more than a year to reach an agreement with the Republicans but that the GOP is committed to opposing everything the Democrats bring to the floor.

“Sen. Dodd reached out to the Republicans on that committee and Senators not on that committee,” Reid told reporters Tuesday. “This is a good piece of legislation Sen. Dodd has reported out of this committee.”

Notwithstanding business interests that would like the regulatory reform bill to fail, corporate and Wall Street lobbyists trying to make tweaks to the final package are relying heavily on moderate Republicans such as Sens. Scott Brown (Mass.), Olympia Snowe (Maine) and Susan Collins (Maine), who are expected to have pull on what makes it into the final bill.

Sen. Bob Corker (Tenn.), who sits on the Banking panel and for a brief period served as Dodd’s top Republican negotiator, noted that the bill making its way to the floor “has a lot of problems,” and that a strategy still needs to be worked out that might swing the legislation back into more promising territory.

“We have to figure out a better way to influence” the bill, Corker said. “I think everyone needs to hold together for that to happen.”

Corker, whose unsuccessful attempt to reach an agreement on the sweeping legislation with Dodd was in part due to a lack of Republican support, lamented that his colleagues were in a worse negotiating position now than when the bill was moving through committee.

But Shelby said a deal still was possible.

“We can get a good bill if they will meet us halfway,” Shelby said. “They haven’t yet; I hope they will. We continue to be open. But we’re not open to a bad bill.”

David M. Drucker contributed to this report.