WASHINGTON Sen. Phil Gramm, the combative Texas Republican whose name is synonymous with financial reform, said Tuesday that he will not seek reelection next year and immediately sparked speculation about the direction of the Banking Committee.
The decision, which had been rumored for months yet denied repeatedly by Sen. Gramms office, means Sen. Richard Shelby of Alabama is poised to inherit the mantle of the committees ranking Republican. Though Sen. Shelby is generally considered a friend of the financial services industry, issues favored by Democrats such as tougher privacy protections could gain momentum. Indeed, no lawmaker spoils for fights to stop bills more than Sen. Gramm.
When Sen. Gramm retires, the Senate and nation will lose one of its most effective, intelligent, combative, controversial, and colorful legislators, said Kenneth A. Guenther, president and chief executive officer of the Independent Community Bankers of America. There is joy in Democratic Mudville tonight Sen. Gramm has laid down his partisan and powerful bat.Sen. Gramm who was Senate Banking Committee chairman from 1998 until Sen. Paul Sarbanes of Maryland became committee boss once Democrats took control of the chamber in June is widely credited with shepherding the Gramm-Leach-Bliley Act through Congress two years ago. The bill broke down decades-old barriers to the expansion of the financial services industry and cemented Sen. Gramms reputation as an industry friend.
In a tearful Capitol Hill news conference, Sen. Gramm said, After a long and difficult period of soul-searching, I am announcing today that I will not seek reelection to the United States Senate. At the end of this term I will end my career in public service.
Though Sen. Gramm has 15 months to go, speculation about the future of the Banking Committee was rampant following the announcement. In the tradition-bound Senate, rules of seniority are scrupulously followed, and Republican Richard C. Shelby is next in line.
If Sen. Shelby were to be challenged, it could come from Sen. Robert Bennett of Utah or other committee Republicans, but sources said that a power struggle akin to what happened last year in the House Financial Services Committee is not expected.
Though Sen. Gramm and Sen. Shelby share many common traits both are former Democrats from the deep South who are fiscally conservative they also have significant differences.
Sen. Gramm is seen as a dependable friend of the financial services industry, and has opposed additional regulatory burden, including stricter consumer privacy protections.
Sen. Shelby agitated for increased consumer privacy protections during and after the passage of Gramm-Leach-Bliley, and in February introduced a bill to require financial institutions to get explicit permission from customers before sharing their financial information with third parties.
Sen. Gramm is known for an all-or-nothing negotiating style, and has frequently preferred no bill at all to a bill with provisions he disliked. I dont take bills hostage unless I am willing to shoot them, he once said.
He recently bragged that in 2000 he single-handedly killed anti-money-laundering legislation to which the financial services industry had objected. He has also placed himself firmly in the path of all attempts to pass bills that would restrict predatory lending, arguing that no one has proved to him that it exists.
Sen. Shelby, though firmly planted in the conservative camp, is viewed as more open to compromise.
While very conservative and principled, Sen. Shelby has a very astute ability to find common ground among his colleagues and move forward where possible, said Lendell W. Porterfield, a former banking legislative aide to Sen. Shelby.
Most observers agreed that the departure of Sen. Gramm will make bipartisan cooperation in the Senate Banking Committee more likely. But even Democrats, who have accused Sen. Gramm of procedural stonewalling and ideological inflexibility, are quick to praise the Texans sharpness of mind and his command of the details of complicated legislation.
I had some very productive but tough negotiations with Sen. Gramm said Gary Gensler, a former Treasury under secretary for domestic finance in the Clinton administration. The Senate will lose a real intellectual force when he steps down. But I think it does open up opportunities on the banking committee for Chairman Sarbanes and Sen. Shelby to work in a bipartisan way to pursue privacy and other initiatives.
Despite these differences, industry representatives praised both Sen. Gramm and Sen. Shelby, saying that both are strong supporters of the banking system.
Sen. Shelby is someone who understands the banking business, said Robert Davis, managing director of government relations for Americas Community Bankers. We will have differences with Sen. Shelby on some of the privacy issues, but he is someone we have always been able to work with.