Critics have questioned Sen. Richard Shelby’s (R-Ala.) commitment to bipartisanship on financial regulatory reform, but one thing is clear: Senate Republicans are depending on him to negotiate the best possible deal and are filibustering the bill to give him room to maneuver.

After dropping in and out of bipartisan negotiations with Banking, Housing and Urban Affairs Chairman Chris Dodd (D-Conn.), Shelby has re-emerged as the GOP point man in the debate over Wall Street reform. And Senate Republicans and financial services industry sources indicate that Republicans will probably continue to filibuster the Democratic bill until Shelby gives his colleagues the all-clear.

“He is showing enormous patience,” Senate Republican Policy Committee Chairman John Thune (S.D.) said Tuesday. “He is trying to get the best possible product that will attract the most Republican votes. And, to do that, he has to be able to get some middle ground struck between where the Dodd proposal is today and something that our guys could vote for.”

Senate Republicans for the second consecutive day Tuesday opposed a cloture motion to proceed to Dodd’s financial regulatory reform bill.

Shelby cut off his negotiations with Dodd for a time from mid-February to mid-March, allowing first-term Sen. Bob Corker (R-Tenn.) to grab the spotlight on the issue. This combination of factors left many Democrats questioning the productivity of negotiations with the Republicans generally and whether Shelby would ever agree to a compromise package.

But Senate Republicans and financial industry services sources familiar with how Shelby operates insist that the Banking ranking member is truly interested in reaching a deal on a financial regulatory reform package. However, these sources say, Shelby is not interested in compromising for its own sake and will drive a hard bargain as long as he feels he has leverage.

“He really doesn’t like where Dodd is. His analysis is that Dodd has problems with his own caucus,” said one financial services industry lobbyist. “Shelby is a master at understanding the leverage points, the politics and the timing. He’s not playing ‘kick the can down the road.’ He wants a product.”

[IMGCAP(1)]Senate Democrats say negotiating with Shelby can be difficult and frustrating, but they stop short of impugning his motives.

“Shelby drives a hard bargain. I don’t think people view him as dealing in bad faith; it’s just that he’s close to impossible to get to ‘yes’ with,” a Democratic Senate aide said. “Other people in his position, with as little political leverage as his side has, would have compromised by now.”

Using Inside Knowledge

Shelby, running this year for a fifth term, was elected to the Senate in 1986 as a Democrat. He switched parties soon after the Republicans won control of Congress in 1994. He is considered a shrewd operator and tough negotiator, in part because as a former Democrat he knows better than many Republicans what motivates the other side.

Lobbyists and GOP operatives who have worked closely with him over the years describe him as prepared and knowledgeable. Shelby tends to use his genial Southern demeanor as a smokescreen to keep private negotiations private. Alabama’s senior Senator doesn’t say much publicly, but behind closed doors he likes to control the conversation.

During a news conference on Tuesday with Republican leaders, Shelby was characteristically circumspect about his talks with Dodd. “Let me try to answer that without answering it,” Shelby said. “One, I’m not going to get into all the details of any negotiations because negotiations come and go and then we crystallize it some type of legislative form. But I can tell you we have made progress.”

Shelby said the biggest obstacle to reaching a bipartisan deal is the partisan disagreement over new consumer protection regulations. Typical of the former Banking chairman, he stuck to policy and declined to be baited into a sparring over politics — even though Shelby defenders contend the obstacles to reform are political, not issue-based.

Senate Minority Leader Mitch McConnell (R-Ky.) outlined Tuesday some key areas of concern for his Conference, referring to the financial regulatory reform package as a “dramatic overreach” that extends beyond overhauling Wall Street. McConnell described the GOP filibusters, which have been joined by Ben Nelson (D-Neb.) as giving Shelby an “opportunity” to continue negotiating with Dodd.

Senate Republican sources describe as “silly” any notion that GOP leadership has placed a short leash on Shelby’s ability to deal — or even that they have given the Alabaman marching orders.

Similar to last summer’s bipartisan gang of six health care negotiations in the Senate Finance Committee, Shelby has kept Republicans apprised of his negotiations, delivering regular and detailed briefings. But where the Republican leadership made clear that GOP participants in the gang of six were not empowered to negotiate on behalf of the Conference, Shelby appears to have a bit more leeway.

A senior Republican Senate aide said the GOP filibuster is giving Shelby the leverage he needs to obtain “everything we can get” in the negotiations with Dodd. “He knows where they can find common ground and will be able to tell if” a deal is possible, this aide said.