Dodd said he would negotiate the financial regulation legislation with Republican Senator Bob Corker, six days after saying bipartisan efforts had failed.
"I am more optimistic than I have been in several weeks that we can develop a consensus bill to bring about the reforms the financial sector so desperately needs to prevent another economic crisis," Dodd said in a statement.
Last Friday, Dodd said he was at an impasse with the top Republican on the banking committee Richard Shelby.
Dodd said he asked Corker to negotiate the bill with him. "We met in my office on Wednesday and given the importance of these issues he agreed," Dodd said.
Dodd, the chief architect on financial regulation in the Senate, introduced a draft reform bill in November. But that bill was met with stiff opposition from Republicans. Dodd then formed bipartisan groups to work on the most controversial parts of the bill, such as oversight of the $450 trillion over-the-counter derivatives market, corporate governance and banking regulation.
Corker had been working with Democratic Senator Mark Warner on new banking rules and a way to resolve large troubled financial firms.