The fate of legislation to use public money to guarantee billions of dollars of refinanced mortgages and strengthen the regulation of government-backed mortgage companies, was in the balance on Thursday as members of the US Senate banking committee gathered to vote on the proposals.

Staffers for Christopher Dodd, the Democratic chairman of the committee, and Richard Shelby, the top Republican on the panel, have been locked in intense negotiations over the bill in recent days, in an attempt to hammer out a compromise that would pave the way for full passage in the Senate.