And that's just the beginning what will be a long and contentious battle to get the bill past the Senate, the House of Representatives and the Obama administration. Lobbyists, large banks, and the heads of government regulators, such as the Federal Deposit Insurance Corp. (FDIC) Chairwoman Sheila Bair, will have their say on the proposal as well.

Still, Dodd's bill, which he worked closely with U.S. Rep. and Chairman of the House Financial Services Committee Barney Frank, D-MA, to draft, is an important first step in the push for financial regulatory reform, which in recent months had been overshadowed by the Obama administration's push for healthcare reform.

Among the most controversial elements of Dodd's bill are four new, independent regulatory agencies that would combine the powers of certain regulators, particularly the U.S. Federal Reserve.

• The Financial Institutions Regulatory Administration: Perhaps the most controversial fixture of Dodd's proposal is this "super-cop" of a regulatory agency that would combine parts of the Fed, FDIC, the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) to oversee all of the nation's banks – large and small.

• Agency for Financial Stability: This agency would be headed by a nine-member board that includes financial regulators and an independent chairman appointed by the president. It would be responsible to identifying and addressing systemic risks throughout the financial system. It would aim to discourage firms from growing so large and complex that a breakdown in operations would pose a threat to the nation's financial stability.

• Consumer Financial Protection Agency (CFPA): A favorite of the Obama administration, this new, independent agency would oversee loans made directly to American consumers, such as mortgages and credit cards.

• National Insurance Office: This office would be created within the U.S. Treasury Department to oversee the insurance industry. This would be the first attempt by the federal government to regulate an industry that has traditionally been monitored by state authorities.

The bill also aims to create a safe way to shut down companies that are "too big to fail" by imposing tough new capital and leverage requirements and requiring they write their own "funeral plans."  There also would be changes made at the Securities and Exchange Commission (SEC).

The SEC would be self-funded through registration fees paid by companies. And a new office would be created to monitor credit ratings agencies.