James Pethokoukis

Politics and policy from inside Washington

The Dodd Effect: 2010 starts great for Wall Street

Jan 7, 2010 18:39 UTC

Washington just got a little more welcome for Wall Street. The retirement of Christopher Dodd, the Democrat from Connecticut, probably hands the chairmanship of the Senate Banking Committee to a friend of the industry in 2011. It also improves the odds of a weaker version of financial reform passing Congress in 2010 — if anything passes at all.

Of course, 2009 really wasn’t all that bad for Wall Street, politically speaking, given the outrage on Main Street. Washington didn’t use its new financial clout to sweep out many top executives. Forced pay limitations and restructuring of financial institutions was far more restrained than it could – and should – have been.

And none of that will happen this year either. By foregoing an almost certain reelection campaign defeat (Connecticut now leans heavily back to the Democrats and probably nominee Richard Blumenthal), Dodd can ditch the populist mantle he adopted to help Connecticut voters forget his links to the stricken insurer AIG. That temporary guise helped shape his initial version of financial reform.

The first Dodd plan called for creating a single financial regulator and a powerful consumer financial protection agency. But when it thudded, Dodd engaged with Republicans. He will in all likelihood redouble efforts to fashion a compromise to serve as his legacy. For instance, a consumer agency, if it can even survive GOP opposition, will be toothless.

Banks will be pleased with the senator in line to replace Dodd as chairman, Tim Johnson. His South Dakota is home to call centers for numerous banks and credit card companies. Moreover, Johnson was the only Democrat in the Senate to vote against President Obama’s credit card reform bill. He once spoke out against capping the interest rates military members pay for short-term loans, fearing such leniency would spread to other “sympathetic” groups. Even if Johnson were to be passed over, Jack Reed and Chuck Schumer would also be to Wall Street’s liking.

Oh, and despite a sudden flurry of “Dodd to Treasury” rumors, he will not be replacing Timothy Geithner. I mean, Geither could get the ax — news that he told AIG to withhold details about payment to banks doesn’t help him — but Dodd won’t be the person stepping in.

Then there’s Sen. Byron Dorgan’s retirement, an added bonus for financiers. His North Dakota seat is apt to be filled by a Republican, balancing out Dodd’s probable replacement by another Democrat. Dorgan’s exit means one less advocate on Capitol Hill for bringing back the separation of commercial and investment banking. The year is off to a good start for masters of the universe.

How Obama’s popularity will affect the midterm elections

Jan 7, 2010 14:33 UTC

The good folks at Public Opinion Strategies have an interesting analysis (in chart form!) of the impact of presidential approval ratings on congressional elections:

approval010710

COMMENT

I am happy with Obama. We voted for a President that would do the right thing and bring change to the country and he did. “Change” is bitter medicine that this country needs. Get used to it folks. I rather have a president that will stand up for what’s right then a bunch of inbred conservative that thinks the middle east is some where near Iowa.

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