As Chair of the Senate Banking Committee, Chris Dodd came under particular scrutiny for some of his own ethical judgments in the last two years. His decision to step down also puts a question mark over historic efforts to reform the financial services industry. WNPR’s Harriet Jones reports.
In 2008, just as the sub-prime meltdown reached its peak, a magazine article revealed details of a deal Dodd received on two of his own mortgages from one of the biggest sub-prime offenders, Countrywide. But, speaking on CNBC, the Senator seemed at that time not to realize just how damaging the revelation would eventually be.
“Those rates we were given were exactly within the band of rates that were available to people. It’s unfortunate that people want to raise that ironically right in the middle of the housing issue as we’re trying to move forward. But again, I don’t feel I have any concerns about it at all. I think the reaction by my colleagues in the Senate, as I say 63 to 5 on my housing bill – I consider it a non-issue.”
But continuing questions over the Countrywide affair slowly chipped away at Dodd’s credibility and his poll numbers – then in March of 2009 his political skills were called into question after he first denied and then admitted that he rewrote part of the stimulus bill to allow executives at AIG to receive bonuses.
“The alternative was losing in my view, the entire section on executive excessive compensation. Given the choice, this is not an uncommon occurrence here, I agreed to a modification in the legislation, reluctantly. I wasn’t negotiating with myself here – I wasn’t changing my own amendment – I was changing the amendment because others were insisting.”
The combined effect of those controversies was to put Dodd into a competitive race in Connecticut for the first time in more than 30 years. They also brought much closer scrutiny of his ties to Wall Street. According to the Washington-based Center for Responsive Politics, during Dodd’s last re-election fight in 2004, employees of Bear Stearns and Citigroup were among his top donors. During his failed 2008 presidential bid, Dodd received almost a quarter of a million dollars from executives of Stamford-based hedge fund SAC Capital Advisers. In the last year, the Senator has championed a raft of high profile populist issues, like reining in the credit card industry, and advocating a consumer financial protection agency. The announcement of his retirement comes right in the midst of his efforts to pass landmark legislation to reform regulation of the financial services sector. Professor Patricia McCoy of UConn Law School says Dodd’s retirement may give hope to the Republicans.
“If they can delay a vote on final legislation until after the November elections then they can significantly affect the content of the bill. On the other hand, the fact that Senator Dodd is not running for office may give him much greater latitude, and a sense of liberation in pushing for what he strongly believes in.”
Dodd’s chairmanship of the banking committee has in the end proved a double-edged sword for one of the Democrats’ most seasoned senators. After his retirement, Tim Johnson would be next in line for the job. But if he’s passed over for health reasons, Rhode Island’s Jack Reed is also mentioned as a potential successor.
For WNPR, I'm Harriet Jones.