Financial Regulatory Forum

Johnson seen taking over as U.S. Senate banking panel chief

By Reuters Staff
January 7, 2010

By Karey Wutkowski and Rachelle Younglai

WASHINGTON, Jan 6 (Reuters) – South Dakota Democratic Senator Tim Johnson, a champion of community banks and credit card companies, is expected to take over the chairmanship of the influential U.S. Senate Banking Committee in 2011.

With the announcement on Wednesday by Connecticut Senator Christopher Dodd that he will not seek re-election in November, Johnson is next on the seniority list to lead the panel, which is in the midst of a debate over financial regulation reform.

In a flurry of speculation following Dodd’s news, financial services industry lobbyists and analysts said that the banking committee under Johnson would likely be more favorable to some business sectors than it has been under Dodd.

“Johnson is widely viewed as a friend of the credit card sector and his elevation to chairman should put to rest worries over interchange (the fee that stores pay banks for credit card purchases) and interest rate caps,” said policy analyst Jaret Seiberg at investment firm Concept Capital.

Johnson was the only Democratic senator to vote last year against a credit card reform bill to curb sudden interest rate increases and hidden fees. The bill was signed into law by President Barack Obama in his first financial reform victory.

Citigroup has a large presence in South Dakota through its credit card unit. Another big financial firm in his state is Wells Fargo Bank, which is chartered in South Dakota.

Johnson suffered a brain hemorrhage three years ago that hampered his mobility and impeded his speech.

But he has been on the mend and his speech has improved markedly in recent months. Two Senate aides told Reuters there were no impediments to him becoming committee chairman.

A spokeswoman for Johnson said the Senator is “up to the task and ready.”

Johnson’s succession assumes that Democrats can retain control of the Senate — a question made more pointed by Dodd’s decision and Tuesday’s announcement by Democratic Senator Byron Dorgan that he, too, will retire.

The Democrats’ Senate majority is slim. A net loss of seats in November could mean a shift in control. If Republicans regain Senate dominance, the committee chairmanship would likely return to Alabama Republican Senator Richard Shelby.

“I know 2010 will be a busy year for the committee as we usher in meaningful financial services regulatory reform,” Johnson said in a statement, praising Dodd’s career and pointedly making no mention of what lies ahead in 2011.

The banking committee chairmanship succession question is up to Senate leaders who, after the November elections, will have to organize the new Congress that will start in 2011.

The Senate leadership could give Jack Reed, the third most senior Democrat on the committee, a bigger role on the panel and have him handle many of the daily chores.

A spokesman for Reed said Johnson is next in line to assume the chairmanship and that Reed looks forward to continuing working with the South Dakota Senator.

Reed, a liberal, chairs a subcommittee on securities, insurance and investment and has introduced bills to rein in the credit rating agencies and the $450 trillion over-the-counter derivatives market.

(Additional reporting by Richard Cowan and Karey Wutkowski; Editing by Andrew Hay and Tim Dobbyn) ((rachelle.younglai@thomsonreuters.com; +1 202 898 8411))

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