WASHINGTON — Senate Banking Committee chairman Christopher Dodd’s announcement yesterday that he will retire from public office will not harm and may actually bolster the likelihood of Congress passing sweeping financial regulatory reform, market participants and Democrats said yesterday.
During a briefing with reporters yesterday, White House press secretary Robert Gibbs said the Connecticut Democrat’s retirement will not make him a lame duck as he works on financial regulatory reform legislation.
The Senate Banking Committee is working to revise draft legislation unveiled in November that was met with criticism from some Democrats and most Republicans. Four bipartisan groups of committee members are said to be reworking the proposal, which the committee could begin to consider as early as Jan. 26. The House passed its own version last month.
The Senate’s draft would have given the Municipal Securities Rulemaking Board more authority in the muni market than the House bill by giving the MSRB authority over non-dealer financial advisers and authorizing it to both assist in the enforcement of its rules and develop new information systems financed by user fees.
“Knowing Sen. Dodd and the passionate advocate that he is, I think he will continue to work hard and want to get this done by the end of the year, as the president does,” Gibbs said.
A former Democratic staffer from the Banking Committee predicted the Senate will want to honor Dodd for his nearly 30 years of service in the chamber by passing a regulatory reform bill with his name on it as his legacy. Republicans that had once intended to obstruct the proposal in order to harm Dodd’s reelection chances may support it, the former staffer said. Dodd would have faced an uphill battle in any reelection attempt.
The final bill could be more moderate, sources said.
“Because he’s retiring, he’ll be even more focused on completing the job while he’s still in the Senate and that means focusing on areas of consensus rather than areas of controversy,” said former Sen. John Sununu, R-N.H., who served on the Banking Committee.
Predictions for how regulatory reform will proceed follow Dodd’s announcement that he would not seek a sixth term in the Senate after his current one ends. In a brief speech from his home in East Haddam, Dodd, 65, said he came to the decision two weeks ago as he stood over the grave of his close friend Sen. Edward Kennedy following the Senate’s passage of landmark health care reform legislation on Christmas Eve.
“In the long sweep of American history, there are moments for each elected official to step aside and let others step up,” he said. “This is my moment to step aside.”
Dodd said he made his decision after reflecting on the loss of his sister last summer, as well as his own brush with prostate cancer and the fact that he is in “the toughest political shape” of his career.
Dodd’s retirement comes as he is polling below his two likely Republican opponents — political novice Linda McMahon and former Rep. Rob Simmons. Politically vulnerable after moving his family to Iowa for his failed presidential bid in 2008, Dodd also was criticized for large bonuses given to executives of the insurance giant American International Group Inc. last year and for receiving favorable mortgage treatment from Countrywide Financial.
A Senate Select Committee on Ethics ruling in August cleared him, as well as Sen. Kent Conrad, D-N.D., from wrongdoing in the Countrywide issue, though it said the two should have done more to avoid the appearance of impropriety.
By stepping aside, Dodd may be ensuring his party has a good chance of retaining his Senate seat. Connecticut’s seasoned and popular Democratic attorney general, Richard Blumenthal, said yesterday that he will run for the position.
If elected, Blumenthal would bring to the Senate an understanding of the municipal market. As attorney general, he has been very critical of the rating agencies that rate municipal debt on a separate and more rigorous scale than corporate debt, which is believed to be more risky. He also has been aggressive in securities enforcement, tackling national issues at the state level. He has played a key role in investigating and pursuing alleged rating agency and auction-rate securities abuses.
Following Dodd’s remarks, Democratic leaders praised his career. President Obama said Dodd has “worked tirelessly” and that his leadership in the Senate would be missed.
Senate Majority Leader Harry Reid said Dodd’s “warm personality, sense of humor, and optimistic spirit has won him great respect and many friends on both sides of the aisle.”
Though Sen. Tim Johnson, widely seen as a moderate, pro-business Democrat from South Dakota, is next in seniority to take over the Banking Committee, other members of the panel may vie for the position, including Jack Reed of Rhode Island and Charles Schumer of New York.
However, Julianne Fisher, a spokesman for Johnson, stressed that Johnson “is next in line for the position and is ready to assume the role.” Though Johnson is said to be mentally sharp, he suffered a brain aneurysm three years ago that has slowed his mobility and slurred his speech.
In a statement, Johnson made no mention of his future role on the committee, instead praising Dodd’s “outstanding” work on health care and financial regulatory reform, which Johnson said has been “invaluable.”
Dodd followed his father, the late Sen. Thomas J. Dodd, into public service. He was elected to Congress in 1974, serving three terms in the House. He was then elected to five terms in the Senate. His 2008 presidential bid failed to gain any traction in the early primary states, despite him having moved his family to Iowa, the location of the first state caucuses.
Dodd was born on May 27, 1944, in Willimantic, Conn., the fifth of six children. He graduated from Providence College, spent two years in the Peace Corps in the Dominican Republic, enlisted in the Army National Guard, and served in the U.S. Army Reserves. He received a law degree from the University of Louisville School of Law and practiced law in New London before being elected to Congress.
Stacy Kaper is a reporter for the American Banker.