WASHINGTON — Senate Banking Committee Chairman Christopher Dodd's plans to not seek re-election could damage a push by the Obama administration to enact a meaningful overhaul of U.S. financial markets this year.
Dodd (D., Conn.), who was facing a tough 2010 election fight, plans to announce Wednesday he will not seek another term, The Wall Street Journal reported. The news comes the day after another key Senate Democrat, Sen. Byron Dorgan of North Dakota, also announced he would not run for re-election this year.
Dodd's decision could throw a wrench into the Obama administration's desire to quickly move its financial regulatory package through the Senate this year. Though the House already passed its version of the measure, Senate action has been bogged down by the debate over health care and a general partisan rancor in the Senate.
Dodd has been attempting to work with the Senate Banking Committee's top Republican, Sen. Richard Shelby (R., Ala.), but progress thus far has been slow. A discussion draft introduced by Dodd late last year was seen as too radical by many Republicans and even some more business-friendly Democrats.
The bill would create a new Agency for Financial Stability, with a mandate to identify and remove systemic risks to the economy under. It could require both domestic and foreign-owned financial firms that are deemed a systemic risk to face enhanced supervision and standards that would be "increasing in stringency with the size and complexity of the specified financial company."
Dodd's decision injects additional uncertainty in the financial regulation debate. It could free him to push meaningful changes to oversight of financial markets without the distraction of a major re-election fight. He might desire to put his imprimatur on a landmark piece of legislation before leaving the Senate.
Dodd has been outspoken about the abuses of the financial services industry in recent years, particularly in regard to mortgage lenders and their unwillingness to help rework loans facing foreclosure.
He has a substantial track record as an effective deal-maker on financial issues. A central player in the deregulation of Wall Street in 1999, the Gramm-Leach-Bliley Act, Dodd was the main sponsor of 2002 legislation to provide a U.S. government backstop for terrorism insurance.
At the same time, his decision gives Republicans the incentive to draw out the process until after next year's elections when a more business-friendly Democrat could ascend to the banking panel's chairmanship. Next in line on the committee is Sen. Tim Johnson (D., S.D), generally seen as more receptive to industry concerns.
Dodd has received mixed reviews for his tenure as chairman. He was one of the first lawmakers in Washington to grasp and attempt to respond to the housing crisis, and was central to the high-stakes negotiations at the height of the financial crisis last year.
Still, he received criticism during his failed 2008 presidential bid for too often being away from Washington, as well as for being tied to failed mortgage firm Countrywide Financial Corp. He was absolved of any wrongdoing in the latter matter by the Senate ethics panel.
These developments took a toll on Dodd's standing with Connecticut voters. Dodd had been losing in polls to his potential Republican challengers, and some Democratic strategists speculated Tuesday that his retirement actually bolsters the party's chances of retaining the seat this year. Connecticut Attorney General Richard Blumenthal, a Democrat, announced Wednesday morning he would run for Dodd's seat, CNBC reported.
There are strong candidates in the GOP primary, including former Rep. Rob Simmons and wrestling executive Linda McMahon, who has said she would spend tens of millions of her own money to win the seat.