As Rep. Scott Garrett seeks to pass the first significant financial reform law since the Dodd-Frank Act, a lot of forces are arrayed against him.

He faces election-year gridlock, the dug-in opposition of a powerful federal agency and the perception that the issue would be better handled in a more comprehensive fashion.

But Garrett, a New Jersey Republican, also has strong support from large U.S. banks and a number of Democratic allies — factors that may smooth a path for his bill in 2013 if he comes up short this year.

The bill would attempt to build a covered bond market in the U.S., which supporters argue is safer than securitizations. In Europe, covered bonds provide financing for a range of credit markets, but they have never taken off here.

"This is a bill that has generally had bipartisan support," Garrett said during a recent interview in his Capitol Hill office. "We came this close to getting it included in the Dodd-Frank legislation."

Garrett's primary opposition isn't Democrats, but the Federal Deposit Insurance Corp. (FDIC), which is concerned that  the legislation, which gives covered bond investors certain protection in the event that the issuing bank fails, might ultimately increase the cost of a collapse.

"The FDIC believes that this legislation fails to maintain that important balance between investor demands and government exposure, providing investors with lopsided benefits at the direct expense of the Deposit Insurance Fund," the agency stated in written congressional testimony last year.

Despite the FDIC's stance, Garrett is pushing ahead. The bill was already approved by the House Financial Services Committee last year by a vote of 44 to 7, and must now be considered by the House Ways and Means Committee because it contains a tax provision. The panel is expected to approve the measure, clearing it for a full House vote.

Garrett said that he believes the House Republican leadership will be happy to put the bill to a vote.

"Everybody in leadership I've talked to is generally favorably predisposed to the bill and has not raised with me any policy red flags or political red flags," Garrett said. "Then once it gets to the full floor, no doubts in my mind that we'll have bipartisan support."

But the question remains whether the bill's Senate supporters can drum up enough support for the measure.

Democrat Sens. Charles Schumer and Kay Hagan have joined Republican Sens. Mike Crapo and Bob Corker in introducing a covered bond bill in November. But Senate Banking Committee Chairman Tim Johnson, who has traditionally been aligned with the FDIC on key issues, is said to share the agency's concerns about the legislation.

A Democratic Banking Committee aide, speaking on condition of anonymity, was circumspect about Garrett's legislation.

"The covered bond issue has come up in discussions about housing finance reform, and it is an issue that Chairman Johnson will continue to look into," the aide said.

Postponing action on Garrett's legislation until 2013 would force covered bonds to be considered as part of the larger debate over housing finance reform.

Over the last three years, Garrett has made an effort to make changes to the bill to satisfy the FDIC's concerns. But at this point he seems convinced that his differences with the agency are irreconcilable.

"Will FDIC ever say, 'We love this bill 100%?' I doubt it," Garrett said. "And so at the end of the day when this bill moves, they will always say 'We have concerns.' I just sort of anticipate that. But does that mean that any legislation that they have concerns on we stop? No, I think we try to make it as best we can, and we've done that."

Covered bonds differ from securitizations in that the underlying assets remain on the balance sheet of the financial institutions that issue them, which provides recourse to bond investors in the event of a default on the bonds.

According to a source familiar with the FDIC's position, the agency's biggest concern involves the treatment of covered bonds when a bank fails.

Under Garrett's bill, the bonds would get pulled out of a bank receivership and placed into a separate legal mechanism, providing an extra layer of protection for the investors.

"When the bank fails, that's when everyone takes their losses. This says that no, you don't have to," the source said. "If you're not subject to the resolution, then there's no downside risk."

Supporters of Garrett's bill note that the U.S. covered bond market has not flourished under the FDIC's current policy, which it adopted in 2008, largely because investors are looking for more protection against the risk of loss.

"What the FDIC is advocating is something different from covered bonds. It really is just generic secured debt," said Scott Stengel, a partner at King & Spalding who supports Garrett's measure.

Garrett hopes that by passing the bill through the House with a significant bipartisan vote, it will put pressure on the Senate to act.

"The Senate doesn't want to be labeled come election time that they've done absolutely nothing on anything that's important," Garrett said.

"So if they can reach out and find some bipartisan legislation that's on an important topic like finance reform … why not grab onto it and say 'Hey, you know, Republicans saying we're not moving stuff, here we're moving a Republican bill, and this is an important bill. And this will probably help the matter. So let's do it.'"

Hagan, one of the bill's sponsors in the Senate, said in a written statement: "This is the type of common-sense initiative that should bring Democrats and Republicans together, and I look forward to working with my colleagues on both sides of the aisle to move this bill forward."

But Jim Johnson, managing director of public policy at the American Securitization Forum, is not optimistic about the chances of becoming law in 2012.

"Is it possible? Yes. Is it likely? Probably not," Johnson said.

Even if the bill is defeated this year, however, Garrett's efforts may help promote the issue in 2013, especially if Republicans gain control of the Senate.

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