It is a rare moment in Washington when a lone politician finds himself at the center of a great legislative battle that he appears to be in a position to resolve. Such a moment might be coming soon for Alabama's Sen. Richard Shelby. As the senior Republican on the Senate Banking Committee, Shelby is positioned to shape a new government role in the American financial system, shifting economic power that has long resided in New York to Washington in hopes of preventing another financial collapse like last year's. It's the kind of transformative accomplishment that creates a historic legacy for a senator, and Shelby -- a complex figure who spent the first three decades of his political career as a Democrat -- appears ready to take a shot at it. 'I believe that we have to have a new regulatory regime for our financial system,' Shelby said in an interview in March, because the old system 'failed us' in 2008. 'Sweeping legislation' will be needed, he said. 'I hope we can do it.' If Shelby and Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee, can agree on that sweeping bill, Shelby said, stating the obvious, 'then the chances of it becoming law are good.' But are the chances of a Dodd-Shelby deal good? Their colleagues on the committee see a reasonable possibility. Sen. Mark Warner, D-Va., a junior member of the banking committee who has grown to admire Shelby, observed that 'putting his name' on a historic piece of legislation would interest the Alabamian. Shelby could play the archetypal Southern senator in a movie. He is a square-jawed, handsome man who speaks mellifluous Alabamese. He is 75 but looks much younger, and at 6-foot-4 he usually towers over everyone around him. He never moves or speaks quickly, and is a master of self-deprecation. 'The most important thing about Shelby is that he lulls people into thinking that he's stupid,' said his friend and former colleague Bob Kerrey, a two-term Democratic senator from Nebraska. He may look like 'a big, dumb guy from Alabama,' Kerrey said, 'but he's smart. He's a classic trial lawyer -- he'll lay a trap for you.' 'He is a prodigious reader of history, and all types of books,' said an Alabama colleague who has known Shelby for years, 'but at home he still plays that good ol' country boy -- `I'm just Richard.' But he's not. He loves New York, he loves Paris, he loves to travel -- he likes all those things, but he downplays it when he's at home. He has the ability to live in both worlds.' In fact, Shelby and his wife, Annette, 70, a retired Georgetown University professor, made three trips to Paris in just the past year on various government-funded missions. Shelby's politics conform to no existing model. On most issues he is predictably conservative, and he rides conservative hobby horses such as a balanced budget amendment to the Constitution (which he introduces every year) and a 'flat' income tax that would impose the same low rate on everyone's income. But he is no knee-jerk conservative. 'A lot of people,' he said in the March interview, 'say, `Let the market work.' You can't let the market work where the market is manipulated to such an extent that it would bring down our economy and half the world. ... I think we're going to have to have a powerful regulatory body that approves or disapproves new (financial) products, that will put the old system in play.' Over the years, Shelby has embraced several consumer-friendly bills endorsed by progressives. He voted for Sarbanes-Oxley, the controversial 2002 law on corporate governance passed in the wake of the Enron scandal that was bitterly opposed by corporate America. He challenged Alan Greenspan's rosy view of the housing market years before the bubble burst and brought on last year's crisis. He warned of the inadequate capitalization of Fannie Mae and Freddie Mac years before they both collapsed. 'He marches to his own drum,' said his old friend Bill Moody, a wealthy Alabama real estate developer who helped Shelby get elected to the Senate. Shelby has always been -- as a Democrat, and then as a Republican -- something of a Southern populist. In his youth in Alabama he was considered rather liberal, according to friends and colleagues from that time. Nearly four decades ago he introduced the Equal Rights Amendment in the Alabama Senate, of which he was a Democratic member from 1971 to 1979. Shelby never embraced the racial politics of the George Wallace faction of Alabama Democrats, and has always enjoyed support from black voters. 'Even some of my Republican friends say I have a populist, progressive streak,' Shelby said in an interview. 'I am not a doctrinaire, anti-government person.' -- -- -- Richard Shelby was the seventh of eight children; his father worked for U.S. Steel as a draftsman. These roots are 'the key to understanding of Richard,' said Washington lobbyist Mike House, who worked for Shelby. 'He's from across the tracks, so to speak. That gives you a different view.' Shelby majored in political science and pre-law at the University of Alabama. He attended law school there with Joe Fine, who later served with him in the state Senate. 'Richard hasn't changed from the first time that I met him,' Fine said. Was he a good law student? 'About like the rest of us,' Fine replied. 'He's not a Rhodes scholar or anything. You kind of get out what you put into it, and everybody had other interests, politics mainly.' Shelby married Annette Nevin and became a country plaintiff's lawyer. He first ran for office (the Alabama Senate) in 1970 as a Democrat, when Alabama had just a handful of Republicans. Jere Beasley, the powerful lieutenant governor, chose him to serve on the rules committee, which 'ran the Senate,' according to John Baker, Shelby's colleague on the panel. 'They controlled everything.' When his law partner Walter Flowers unexpectedly gave up the U.S. House seat that included Tuscaloosa, Shelby decided to run. He won and was reelected handily three times. In 1986, Shelby challenged the incumbent Sen. Jeremiah Denton, R-Ala., a retired Navy admiral and war hero -- the biggest political gamble he ever took. As the owner of a successful real estate title company, Shelby was financially secure and wanted to test himself at a higher political level. 'A lot of my friends tried to talk me out of running,' Shelby recalled, suggesting he wait to run for governor or senator later. A tough primary fight forced Shelby to spend most of the money he had raised, and he won by just 6,233 votes out of 1.2 million cast, the only close race in his political career. The newly minted Sen. Shelby promised to hold a town-hall meeting in each of Alabama's 67 counties at least once a year, which he has done for 23 years, through 1,541 town-hall meetings. He was reelected to the Senate in 1992 in a landslide. Two years later, Republicans swept back into control in both houses of Congress, and soon afterward the self-described 'lifelong Democrat -- I was born one' -- joined a growing army of Southern Democrats who switched parties in the '80s and '90s. Republicans rewarded Shelby by giving him an appropriations subcommittee chairmanship. Shelby, a legendary fundraiser, has more than $15.3 million in his campaign account and personal political action committee. He also brings home a huge quantity of bacon. Alabama gets about $1.50 back from Washington for every $1 it sends to the U.S. Treasury, much of it in earmarks written and promoted by Shelby. The Shelbys have also accumulated personal wealth. They are multimillionaires whose two personal homes, one in Georgetown and another in Tuscaloosa, are each valued at more than $1 million. Shelby's populist streak and his belief in the utility of better government regulation is what makes the idea of a Dodd-Shelby reform bill at least plausible. Many Republicans decided to simply oppose any Democratic effort to set new rules for the money game. House Republicans all voted no last Friday when their Democratic colleagues passed their version of financial regulatory reform. Shelby, by contrast, clearly would like to help the Democrats write the Senate bill, provided his influence is substantial. He and Dodd have spent hours mulling the issues. Dodd has been cultivating Shelby for two years. They collaborated last spring on a bill imposing new, consumer-friendly rules on the big banks that issue credit cards, after Shelby won changes in a Dodd draft. Their joint effort was tougher on the banks than a similar bill passed by the more liberal House. For months the staffs working for Dodd and Shelby have been sharing proposals and discussing regulatory reform. Then in October, Shelby surprised Dodd by telling him that he could proceed with discussions only if Dodd agreed to drop a proposal for a consumer financial products agency. Dodd had announced months earlier that he considered this -- a sort of consumer product safety commission for financial products, from home mortgages to credit cards -- as a centerpiece of reform. President Obama does, too. The House approved it last week. If Shelby were insisting on this condition, then Dodd decided to proceed without him. Dodd asked his staff to produce a 'discussion draft' of a reform package that he formally introduced to the full banking committee on Nov. 19. Shelby trashed Dodd's draft in an uncharacteristically harsh, sarcastic performance. 'This committee has not done the necessary work to even begin discussing changes of this magnitude,' he said, slamming one provision after another. It was, said a senior Dodd aide, 'over the top.' Then a few hours later, the mood abruptly changed again. Dodd announced that he would not insist on a speedy timetable for markup of a bill, which he had announced earlier. And Shelby struck an entirely new tone: 'We might be agreeing on 70 percent, perhaps more,' he declared. 'We've got a lot of the concepts we've got to work out, but I think we can do it. ... We're going to try hard to work with you to do a good bill.' On Nov. 30, Shelby gave a speech to the Oxford University Union in England that held out hope for a constructive new regulatory regime not radically different from the one Dodd had proposed, though without any consumer protection agency. So is Shelby serious, or disingenuous? House, the former Shelby aide, described the Shelby legislative method: 'He'll drive (his colleagues) crazy. They can't figure out where he is -- he won't deal, he won't deal, he won't deal, and suddenly he's dealing. That's what makes him such a good legislator.' 'We are honestly making progress,' Shelby said Wednesday. 'We will probably make a joint statement before we leave here (for the holiday recess). We hope maybe toward the end of January to have crystallized a bipartisan agreement.' Negotiations are continuing. -- Research editor Alice Crites contributed to this report. 