What is the difference between the two bills? Broadly, we can identify two dimensions: technocratic and distributional. On the technocratic side, Dodd supporters argue that the financial crisis will be resolved more cheaply if (for example) the government demands equity warrants or must submit to judicial review. Maybe, maybe not. The main difference, it seems to me, is distributional.
This difference is reflected both in political rhetoric (with the Democrats arguing that their bill favors the taxpayer) and the substance of the bills. If you think that the average over-indebted homeowner and the average taxpayer are less wealthy than those who operate and hold shares in big financial institutions, then the Dodd bill favors lower-income people relative to the Paulson bill, at least if its provisions work as intended. The homeowner relief provisions will transfer wealth from holders of bonds to homeowners who are likely to default (though not necessarily future buyers or sellers of homes). The constraints on executive compensation should transfer (a tiny amount of) wealth from rich people to taxpayers. The equity warrants are said to benefit taxpayers by giving them a share of the upside if there is one (I