Dodd's retirement decision may boost chances for financial regulatory overhaul
Thursday, January 7, 2010
As Sen. Christopher J. Dodd (D-Conn.) winds down his 30-year run in the Senate, his top remaining priority -- a landmark piece of legislation that could shape his legacy -- is an effort to enact the greatest overhaul of the nation's financial regulatory system since the Great Depression.
Lawmakers, financial industry representatives, consumer advocates and other observers offered varying predictions Wednesday about how Dodd's pending retirement might influence his approach as he shepherds the reform bill through the Senate. But most agreed that Dodd's desire to leave behind meaningful changes, coupled with the freedom from a grueling and uncertain reelection campaign, bodes well for the prospect that a bipartisan bill could emerge from the Senate.
"I think this probably improves the chances for a financial rewrite," said Sen. Mark Warner (D-Va.), a member of the Senate banking committee, which Dodd leads. He said Dodd's close relationship with the panel's ranking Republican, Richard C. Shelby (Ala.), and the fact that "this will be a legacy item for both of them," creates "the framework for a good bill."
Consumer advocates and financial lobbyists, who have long been at odds over the direction of financial reform, each held out hope Wednesday that a politically unencumbered Dodd might shape legislation more in line with their interests.
"I hope that he'll focus like a laser beam on reform," said Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group. Mierzwinski's group has been pushing hard for changes such as the creation of an agency devoted to protecting consumers of financial products, which Dodd and the administration have called a top priority, but which has run into stiff resistance from Republicans and the banking industry.
Mierzwinski said Dodd's decision might allow him to push harder for such measures. "I think it could play to our advantage. He can worry more about the policy and not the politics," he said. "My guess is he's worried more about his legacy than he is about making compromises."
Freed from politics
Meanwhile, groups such as the American Bankers Association, which has strongly opposed the new agency, hope that Dodd's decision actually leads him down the road of more compromise.
"If there was going to be a bill, it had to be a bipartisan bill with some significant compromises," said ABA President Edward L. Yingling. "He's now more free to move to a bipartisan compromise" rather than "having to constantly look over his shoulder to see what the politics of it all might be in Connecticut."
Still, both men agreed that whatever tack Dodd takes, he will be determined to produce a bill before his tenure expires.
"He's got time to finish this, and without the white noise, the clutter, whatever you want to call it, of worrying about being reelected," Mierzwinski said.
Yingling added: "He will have more time to focus on it."
Still, what remains is a massive and complicated piece of legislation, and reaching consensus will take more than good intentions. In November, Dodd unveiled an 1,136-page draft bill that adopted many of the administration's proposals but also put him at odds in certain areas with both the administration and House lawmakers, as well as several moderate Democrats on his own committee.
In November, talks between Dodd and Shelby broke down, largely over Shelby's opposition to creating the new consumer agency. Last month, however, the two announced a return to the bargaining table. "Our country needs financial regulatory reform and we are committed to working together on legislation to create a sound regulatory structure," they said in a joint statement.
A likely successor
Dodd's decision to retire means that Sen. Tim Johnson (D-S.D.) is likely to take over as chairman of the banking panel in the next Congress. Johnson, 63, suffered a brain hemorrhage in 2006 that impaired his speech and forced him to use a motorized scooter. When Dodd considered leaving the banking post in 2009 to head up a key panel dealing with health-care reform, some Democrats wondered privately whether Johnson was physically capable of succeeding Dodd as chairman.
But Johnson's condition has improved, and a Senate leadership aide, granted anonymity to discuss a delicate issue, said that top Democrats didn't see his health as an impediment. Johnson is known as a champion of the credit card industry, as many card issuers have based their operations in South Dakota to take advantage of the state's absence of caps on the interest rates companies can charge. When the Senate passed a credit card reform bill in May, Johnson was one of just five senators -- and the only Democrat -- who voted against it.
In the meantime, Dodd remains in the chairman's seat with the opportunity to put his stamp -- and possibly his name -- on a bill that could significantly alter the relationship between Washington and Wall Street. "I may have the optimism of a neophyte, but I thought the chances were pretty good before," Warner said of its prospects. "If this removes one level of the partisan concerns, so much the better."
Staff writers Ben Pershing and David Cho contributed to this report.