Sen. Chris Dodd came out swinging today to defend his revamped proposal for fixing the financial regulatory system, and he’s won cautious support from some key reformers. Bailout watchdog Elizabeth Warren, who has been the most vocal Beltway advocate of an independent agency to protect consumers, called the bill an “important step” and no Democratic members of Dodd’s Banking Committee have rejected it. Check out the bill’s summary here. The primary complaint, however, remains Dodd’s choice to house a new Consumer Financial Protection Agency inside the Federal Reserve rather than make it a stand-alone regulator. It’ll be a bureau, not an agency. Dodd strongly defended the move, arguing that creating a bureau inside the Fed strengthens rather than weakens the effort. As Huffington Post reports, Dodd’s main point is budgetary: The bureau would be funded through the Fed’s money and thus shielded from the political whims of congressional appropriation. “Look at Equal Employment Opportunity Office, what happens when you starve a budget,” Dodd told HuffPo. “You can have all the wonderful laws on the books; if you don't have a budget that allows you to operate, you die.” Fair enough. And the director will be presidentially appointed for five year terms. But critics point to a provision that allows an oversight board to rein in the bureau if it treads too heavily on the “safety and soundness” of the banking sector. Who sits on that board? The existing regulators, who failed to stop the subprime predation and risky lending that started all of this.