WASHINGTON — For Sen. Chris Dodd, the death of Sen. Edward Kennedy not only means losing his closest friend in the Senate, it also creates a dilemma for the Connecticut Democrat's political future and raises fresh questions about the fate of regulatory reform.
After months of standing in to lead the health-care debate on behalf of his colleague, Sen. Dodd must decide whether to stay as chairman of the Senate Banking Committee or assume Kennedy's mantle as chairman of the Health, Education, Labor and Pensions Committee.
If Dodd surrenders the banking chair, it is not immediately clear who would succeed him. By virtue of seniority, the position would fall to Sen. Tim Johnson of South Dakota, a community banking advocate and Democratic moderate.
But it's possible Johnson, still suffering the aftereffects of a brain injury two years ago, could step aside in favor of Sen. Jack Reed, a Rhode Island liberal who has been primarily focused on housing issues.
All three lawmakers are liable to take different approaches to regulatory reform — leaving the bill and the future of the banking industry in the balance.
Observers, lobbyists and former Hill aides were split Wednesday on whether Dodd would stay, with some saying he would attempt to keep his lead position in the health-care debate and remain chairman of the Banking Committee. Others, however, said Dodd is already facing pressure from the Obama administration and Democratic leadership to assume the chairmanship of the HELP panel.
Dodd was clearly not ready to discuss the issue yet.
"I haven't given that a second's worth of thought," Dodd told reporters on a conference call from Connecticut. "Obviously, I'll have to talk to the leader and others about it. But today, I'll leave that for a decision down the road over the next few days. Let me give it some thought and talk to some people. I really don't have an answer for you at this point."
Though Dodd would stay on the Banking Committee, surrendering his chairmanship would likely at least slow the reg reform debate. Either Johnson or Reed would likely want to take it in different directions.
The banking industry would be the most immediate beneficiary of a Johnson chairmanship. Though Dodd has been borderline hostile to banks during the past year, Johnson has close ties to bankers. Citigroup's credit card operation is based in his home state of South Dakota, and he has repeatedly staked out positions popular with smaller community banks.
Johnson was an early champion, for example, of deposit insurance reform, and led the fight to keep Wal-Mart Stores Inc. from buying an industrial loan bank in Utah — both issues that were critical to community banks. He was also the only Banking Committee Democrat to oppose a bill enacted earlier this year that was designed to rein in credit card abuses.
Though he has stayed largely silent on regulatory reform, many said he is likely to oppose stripping consumer protection enforcement power away from the banking regulators, as the Obama administration has recommended, and giving it to a new consumer protection agency. Johnson may also favor keeping at least some form of national bank preemption — something the administration has recommended eliminating.
"It would give reg reform a whole different twist," said Brian Gardner, an analyst with KBW Inc.'s Keefe, Bruyette and Woods. "I think a different level of preemption would survive. He may not be as enthusiastic about the whole idea of [the consumer protection agency] in general. I don't know exactly where we go on this, but I feel pretty confident that it would be a very different take."
