Furor Over AIG Bonuses May Affect Dodd
Conn. Democratic Stalwart Tarred by Ties to His State's Financial Industry

By Keith B. Richburg
Washington Post Staff Writer
Sunday, March 22, 2009

WILTON, Conn., March 21 -- For his nearly three decades in the Senate, Christopher J. Dodd has been a towering figure in tiny Connecticut, untouchable by political opponents in his four reelection races and a prodigious fundraiser thanks to his strong ties to the state's huge financial services sector.

But with banks, insurance companies and investment firms now held in widespread contempt, Dodd's political fortunes have also taken a hit. For the first time since he was elected to the Senate in 1980, he could face a serious challenge. And some of Dodd's longtime supporters are saying they will not vote for him again.

"I think his days are numbered," said Linda Walker, a retired nurse from Ridgefield. "He doesn't have the character I thought he had. That's where term limits come in."

Speaking of all long-serving politicians, Walker said, "They become so disconnected from where they're from."

"I'd rather he not run and save himself the embarrassment of losing," said Andrea Beebe, a teacher who also lives in Ridgefield. "You know, he was up to his eyeballs. He's had his hands in the mud pile for four or five years."

And these are Dodd's onetime supporters.

The most immediate issue for Dodd is the $165 million -- possibly more -- in bonus payments to employees of insurance giant American International Group. Many top AIG executives live in Connecticut, specifically in prosperous Fairfield County, one of the wealthiest in the nation. And the AIG Financial Products division, which is largely blamed for the country's financial meltdown because of its dealings in toxic mortgage-backed securities, is based here in the town of Wilton and was the target of a small but noisy protest rally Saturday.

Dodd, 64, is chairman of the Senate Banking, Housing and Urban Affairs Committee, and Wednesday night, he said his staff removed a provision from the recently enacted economic stimulus bill that would have blocked AIG from paying those bonuses. Dodd said he was acting at the request of Treasury Department officials, who feared the provision would prompt legal challenges. But earlier in the week, Dodd had said he did not know how the provision got removed from the bill.

That shift in position has only underscored for many Dodd's close relationship with AIG. The company's employees and political funds have contributed $300,000 to Dodd over the past decade, according to the nonpartisan Center for Responsive Politics.

Dodd, who was traveling in the state this weekend after a tumultuous week in Washington, has remained defiant and tried to limit the damage. He was quoted in an Associated Press story from an event in Enfield, Conn., on Friday saying, "I'm going to do my job. Politics will take care of itself, one way or the other, in the final analysis. And I'll either once again earn the respect and confidence of the people of this state, or I won't."

Dodd is also under a Senate ethics investigation involving two mortgages he received from Countrywide Financial for his homes in the District and Connecticut. Dodd in 2003 was enrolled in a Countrywide VIP program that gave him preferential treatment for those loans. Countrywide, once the country's largest mortgage lender, was sold last year to Bank of America as its subprime mortgage portfolio began to collapse.

On top of all that, this state's pride and sensibilities were hurt when Dodd last year made his quixotic run for president, dramatically uprooting his family and moving to Iowa before that state's Democratic caucuses.

"This is kind of like a perfect storm going for Chris Dodd at the moment," said Edward Anderson, who described himself as "an activist" from New Haven. "Is he with the people, or is he working for the corporate interests?"

"Dodd's in trouble," Anderson said. "Everybody wants to give Dodd six or eight months," Then, pointing to his well-behaved golden retriever, Bo Diddley, Anderson said, "He's vulnerable to my dog if he's not careful.

"I voted for Dodd. I'm a strong Chris Dodd supporter," said Bruce Miller, a middle school guidance counselor from Winstead. But he added: "He oversaw the committee. I'm very disappointed in Chris Dodd."

The national Republican Party has tried to make Dodd, along with Rep. Barney Frank (D-Mass.), the public face of Democratic culpability for the nation's financial collapse.

At the protest Saturday outside AIG Financial Products, about two dozen people -- from the Connecticut Working Families Party and the community activist group ACORN -- chanted and held aloft signs with slogans such as "Damn You, AIG," and "Dude, Where's My Life Savings?" The protesters arrived in Wilton after a bus tour that took them to the posh homes of two AIG executives, or what the organizers called a "Lifestyles of the Rich and Infamous" tour.

Joining the protesters, but not on the bus, was Scott Kimmich, a 79-year-old retiree, who said he lost a third of his life savings in the economic collapse, and "that's all I have -- I don't have a pension." He, like many others interviewed, mentioned Dodd's shifting explanation for the removal of the provision that would have blocked the AIG bonuses.

"I like Chris Dodd," he said. "I think he made a bad error in what I call a sort of a coverup." But like others, Kimmich said he was hoping a contender would challenge Dodd in the Democratic primary, because few in this overwhelmingly blue state said they were ready to vote for a Republican to unseat him.

Some mentioned the state's popular attorney general, Richard Blumenthal, who lives in Greenwich, as a better choice, and others said they hoped Ned Lamont, who won the Democratic primary in 2006 but lost to Sen. Joseph I. Lieberman (I), would run against Dodd. (Lamont has indicated he would run for governor next year).

"If Ned Lamont were running for Senate and Chris Dodd would stand down, that would be a great thing," Kimmich said.

Lucille Miller, a 78-year-old retiree from Thomaston, said, "Dodd -- right now I'm not very happy with him. Democrats -- and I'm a Democrat -- should rethink his running again."

Dodd's only announced challenger is Rob Simmons, a moderate former Republican congressman and CIA officer who narrowly lost his reelection bid in 2006. He has since been working as an appointee of the governor, in the position of business advocate.

A March 10 Quinnipiac University poll showed Simmons and Dodd in a virtual tie in a hypothetical matchup, with Dodd at 42 percent and Simmons at 43 percent -- the margin of error was plus or minus 2.8 percentage points. That poll showed Dodd with a 49 percent job approval rating and sagging support among independents.

But Simmons's problem is the growing Democratic party identification in the state. As Miller, the guidance counselor, said: "I would never vote for a Republican."

A longtime Democratic activist in Fairfield County, who spoke on the condition of anonymity in order to be more candid, said he saw the situation as similar to the year before the 2006 election, when Lieberman, then a Democrat, faced a groundswell of popular anger over his support for the Iraq war and eventually lost the primary despite the backing of the powerful Democratic State Central Committee.

"Everything in the Democratic party is exactly the same as the run-up to 2006," he said, noting that Lieberman was a national figure who made a quixotic run for president in 2004.

"People know the Chris Dodd name now, but they don't know the man himself," the Democratic activist said. "He's like a celebrity in Washington. . . . Voters in Connecticut are very parochial about the state."

Staff writer Shailagh Murray in Washington contributed to this report.

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