Consumer Help, Regulatory Reform Boosted By Dodd Decision
By Michael R. Crittenden, Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- U.S. Sen. Christopher Dodd's apparent decision to
remain chairman of the Senate Banking Committee should put the financial
services industry on the defensive as lawmakers consider greater consumer
protections and an overhaul of the financial regulatory system.
Dodd, a Democrat from Connecticut, is expected to announce Wednesday afternoon
that he will not leave the panel to take over the chairmanship of the Senate
Health, Education, Labor and Pensions Committee. A spokeswoman declined to
comment on his decision, but sources told Dow Jones Newswires on Tuesday he
would remain at the helm of the banking panel.
That decision sends a clear message that Dodd is committed to moving a
comprehensive regulatory overhaul bill, said Lendell Porterfield, a former
senior aide on the Senate Banking Committee.
"It should tell them that reg reform is on the way in the Senate. ... It's not
just the continuity, it shows a conscious commitment" to moving legislation,
said Porterfield, chief executive of government relations firm Porterfield,
Lowenthal & Fettig.
It also makes it more likely that any regulatory overhaul bill produced in the
Senate will be more aggressive in cracking down on questionable financial
products and putting into law greater consumer protections. The Obama
administration's proposal to create a Consumer Financial Protection Agency
should get a boost with Dodd remaining at the helm of the banking panel,
analysts said.
"We expect that he will push to complete two parts of the regulatory
restructuring plan more aggressively than others - the creation of a consumer
protection agency for the banking industry and executive compensation
legislation," Brian Gardner, an analyst at Keefe Bruyette & Woods, said in a
Wednesday report.
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. A focus on such populist issues should
only increase because he faces a tough re-election battle next year.
"In brief, the banking sector will continue dealing with a Senate Banking
chairman who needs to show voters that he not captive to the financial sector.
That is never a positive development," Concept Capital analyst Jaret Seiberg
said in a note to clients on Wednesday.
Additionally, Dodd's decision to remain on the banking panel means that Sen.
Tim Johnson, D-S.D., will not be taking over the chairmanship. That's a loss for
banks and financial services firms, Seiberg said, as Johnson is generally seen
as more receptive to industry concerns.
The panel is expected to release its overhaul legislation in the coming weeks.
People familiar with the committee have said staff spent much of the August
recess drafting legislative language for the regulatory overhaul measure, which
Dodd has said he wants to move as a single bill through the oft-delayed Senate.
The panel has not set a deadline for introducing and taking up a bill as
lawmakers iron out details and Dodd seeks support for the measure.
The Obama administration and top Democrats have said they want to pass
legislation by the end of the year, but that timeline could be pushed back by
the debate over healthcare and Senate work on other must-pass bills. Dodd's
decision should provide some focus and momentum on the regulatory overhaul
issue, Porterfield said, raising the long-term chances that he'll produce
legislation a majority of senators can support.
"One, it shows a commitment from him on reg reform, and two, I think it will
increase the probability that reforms are going to pass," Porterfield said.
-By Michael R. Crittenden, Dow Jones Newswires; 202-862-9273;
michael.crittenden@dowjones.com
(Corey Boles contributed to this article.)
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09-09-091309ET
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