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Sen. Christopher Dodd (D-Conn.) is considered vulnerable in a reelection bid. (By Melina Mara -- The Washington Post)
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"Dodd Looks to Distance Himself From Financial Firms"
By Lori Montgomery and Binyamin Appelbaum, Washington Post Staff Writers, Tuesday, July 21, 2009
Sen. Christopher J. Dodd has been a friend to the nation's largest financial firms for nearly three decades, and they have been his most generous donors. But now he finds himself in political trouble, and is trying to prove the relationship is over.
In recent months, Dodd, chairman of the Senate banking committee, has traded quiet advocacy of measures favored by financial companies for a vocal crusade to rein in those very firms, whose excesses are widely blamed for the economic crisis. He has stopped accepting donations from banks supported by federal bailout money. And he has spent $500,000 on campaign ads that bash credit card companies as "loan sharks" and paint financial lobbyists as crybabies who think Dodd is "a big meanie" because he won't take their calls.
It remains to be seen how the Connecticut Democrat's makeover will play back home, where voters have been disillusioned by a steady drip of negative reports about Dodd's relations with the rich and powerful. In a state dominated by Democrats, polls show him trailing a little-known Republican challenger ahead of next year's Senate election.
But in Washington, Dodd's effort to burnish his populist credentials is shifting the balance of power at a critical moment, according to banking industry representatives, consumer groups and political analysts. As Congress begins to debate a historic overhaul of the agencies that regulate the nation's financial system, the powerful chairman has pushed through new limits on credit card companies and is throwing his weight behind the creation of a new agency to protect consumers, an idea bankers bitterly oppose.
Dodd denies shifting his philosophy on the financial industry in a bid to court voters. Over the years, he has championed consumer protection measures along with legislation that permitted banks to expand their geographic reach and business activities and, in the case of Wall Street investment banks, win federal protections. Dodd acknowledges that the near-meltdown of the financial system last fall proved that "firewalls" in the system he helped to erect "didn't work as well . . . as you'd like." After long fostering "creativity" in the banking industry, he said his goal now is to see that "the architecture is in place" to prevent a future collapse.
In an interview in his Senate office, Dodd likened the tension in his job to a statue outside the Federal Trade Commission building that depicts a man controlling a balky horse. "I want a muscular financial services sector," he said. "But I want a muscular restraint so that it doesn't run wild."
With the Democrats in control of Washington, Dodd is leading two of the Senate's most important panels. As banking chairman, he will shape financial system changes that President Obama has proposed. And this week, he was wielding the gavel when the Senate health committee became the first congressional panel in a generation to approve a major overhaul of the nation's health-care system.
But a Quinnipiac University poll shows Dodd's approval rating falling from nearly 60 percent in May 2007 to 33 percent this spring. In a head-to-head matchup, Dodd trails former congressman Rob Simmons, a Republican who lost his seat in 2006. Stuart Rothenberg, editor of the Rothenberg Political Report, calls Dodd the most vulnerable Democrat in the Senate.
Focusing on Consumers
Dodd, a gregarious Irish charmer with a patrician pouf of white hair, began to see his popularity in Connecticut plummet in 2007 after he moved his family to Iowa for a disastrous run for president and then was pounded by disclosures about his connections to the financial world. There were the allegations last year that he had received a favorable interest rate when he refinanced his home with Countrywide Financial, which classified him as a "Friend of Angelo," referring to company founder Angelo R. Mozilo, who has since been charged with fraud in connection with risky lending. And there were negative reports in the Connecticut media related to his friendship with a board member at the investment bank Bear Stearns who was convicted of insider trading in 1993. Dodd denies he was involved in any impropriety in either instance.
Dodd was also stung by the flap over millions of dollars in bonuses paid to executives at American International Group, the troubled insurance giant, which has offices in Connecticut and has routinely held fundraisers for the senator. The White House asked Dodd to reword a legislative proposal so the bonuses could be paid, he said, and the public ended up focusing its outrage on Dodd, not the Obama administration.
With his popularity deteriorating, Dodd has focused with new fervor on consumer protection issues, alarming financial industry lobbyists. He has long sided with consumer groups on issues such as imposing tighter limits on credit card companies and opposing changes that make it harder for consumers to erase debts in bankruptcy. But he also has supported the growth of the financial industry, playing a critical role in several pieces of legislation that led to the rise of financial conglomerates such as Citigroup.
In 1991, Dodd introduced a measure at Wall Street's request to allow the Federal Reserve to make emergency loans to investment banks, creating a federal safety net. He was an early advocate for legislation allowing banks to expand across state lines, clearing the way for the emergence of national franchises such as Bank of America. The bill finally passed in 1994. In 1999, he brokered a critical compromise to allow banks to sell securities and insurance, legalizing the merger of banking giant Citicorp with Travelers, an insurance and securities conglomerate.
During his presidential campaign, Dodd told the Birmingham News that he believed the rise of financial giants was good for consumers. "Consumers want efficiencies, too," he said. "People don't want to go to six different places for their financial services."
Advocate for Protection
In the wake of the financial crisis, however, Dodd has concluded that the government should impose unprecedented constraints on those firms, limiting their profits to better protect consumers.
He has become a leading advocate for the creation of a new federal agency to protect consumers of financial products such as mortgages and credit cards, an idea the industry opposes. His staff has been urging him to take clearer public stands on consumer issues.
"He seems to be more activist and populist than he has in the past," said Brian Gardner, a political analyst for the investment bank Keefe, Bruyette and Woods. "And it has the potential to be pretty negative for the industry."
Dodd campaign manager Jay Howser said getting beat up by banking lobbyists is hardly a political liability. "Lobbyists might want to whine, but Chris Dodd doesn't work for them," he said. "He works for the people of Connecticut."
Dodd political adviser Jim Jordan said the senator's shift in focus makes sense. "He and other members are working to ensure that these outrages don't occur again. I don't think there's anything counterintuitive or surprising about that," he said.
Dodd has also changed his fundraising tactics. He has been a member of the banking committee since he began serving in the Senate in 1981, and he represents a state where more than 10 percent of the workforce is employed in the financial services industry. The industry has been his single largest source of campaign funding, contributing $11.7 million since 1989, according to OpenSecrets.org.
Citigroup's political action committee and its employees have given Dodd $427,000 during his political career, the largest sum he has received from any company, according to OpenSecrets, whose analysis does not include the latest campaign finance report, filed last week.
In February, Dodd announced that he would no longer accept donations from firms that have been bailed out by taxpayers, including Citigroup. Still, the broader financial industry has remained his largest source of contributions.
"On the one hand, he shakes them down for money on a regular basis and, on the other hand, he demonizes them in his public speeches," Simmons, one of several Republicans vying to unseat Dodd, said in an interview. "There's a terrible dishonesty there."
Dodd and his supporters see no contradictions. Rep. Rosa DeLauro (D-Conn.), a longtime friend who ran Dodd's first Senate race, said the senator has always been willing to stand up to his benefactors. In addition to campaigning aggressively on the streets of Connecticut, Dodd said he plans to spend the next year and a half doing just that.
"The best antidote" to political trouble, he said, is to give voters "a chance to see that you're fighting on their behalf."
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Staff writer Brady Dennis contributed to this report.
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"In Chris Dodd we trust?"
By Dave Wedge, Sunday, July 26, 2009, www.bostonherald.com - Local Politics
Sen. Chris Dodd, a Connecticut Democrat who has sworn off lobbyists in his campaign ads, and Sen. John F. Kerry turned up on Martha’s Vineyard last weekend with a bevy of Beltway influence peddlers, according to Washington political publication The Hill.
Dodd and Kerry attended the Democratic Senatorial Campaign Committee’s annual shmoozefest, with scores of top lobbyists.
Kerry has long been one of Washington’s biggest recipients of special interest money, but Dodd’s attendance was eyebrow-raising. His campaign has launched Web ads touting his record and noting that lobbyists have said they can’t get their foot in the senator’s door.
“Chris Dodd is putting the people of Connecticut ahead of those poor lobbyists,” his site proclaims. “ ‘No one meets with Dodd,’ the lobbyists complain. He certainly isn’t doing things to cater to the K Street crowd.” But the Vineyard bash included several influential lobbyists, including Ben Barnes, former Louisiana Sen. John Breaux and Ed Black of the Computer & Communications Industry Association, the Hill reported.
Breaux and Barnes have both donated to Kerry, records show.
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Reader's Comment:
On 7/26/2009, "patthepainter" wrote: "Chris Dodd is what is wrong in congress. He has received a lot of special treatment from lobbyists and financial institutions already."
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"Connecticut Republican calls on Dodd to resign"
AP, July 27, 2009
SOUTHINGTON, Connecticut -- A Republican opponent wants U.S. Sen. Chris Dodd to resign after a loan official with Countrywide Financial said the Democrat and a colleague knew they were getting VIP mortgages with the lender.
Senators Dodd and Kent Conrad have denied the allegation.
Robert Feinberg worked in Countrywide's VIP section. According to a transcript obtained by The Associated Press, he told Republican investigators for a House oversight committee last month that both senators were told they were getting preferential treatment. Both men were said to be considered "friends" of Angelo Mozilo, Countrywide's chief executive.
State Sen. Sam Caligiuri, who's seeking the Republican nomination for the U.S. Senate, called the testimony troubling Monday and called on Dodd to resign.
Dodd heads the Senate Banking Committee. He refinanced residences in Connecticut and Washington.
Dodd still maintains he got no preferential treatment.
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"Senate panel passes sweeping financial-regulation bill"
By David Cho and Brady Dennis, Washington Post Staff Writer, A01; March 23, 2010
The Senate banking committee voted along party lines Monday to transform the regulation of financial markets, sending another piece of far-reaching legislation to the full Senate a day after Congress approved an overhaul of the nation's health system.
After Republicans decided to save their objections for the Senate floor, Sen. Christopher J. Dodd (D-Conn.), the committee chairman, pushed forward with a financial-regulation bill that sheds several compromises reached with opposition lawmakers and instead hews more closely to the blueprint advocated by the Obama administration.
With the landmark vote on health care behind them, administration officials intensified efforts Monday to get the reform of financial regulation adopted before the November midterm elections. President Obama and his senior advisers are planning to focus more on this issue, seeking to tap into the anger among many voters over Wall Street excesses, a senior administration official and congressional Democrats said.
As the country recovers from its worst economic crisis since the Depression, Obama and his allies on Capitol Hill are pressing for the most dramatic remaking of financial oversight since then.
In seeking to recast the rules that have long governed the financial sector, the bill would in part establish a bureau inside the Federal Reserve to protect consumers and set up a council of regulators to survey threats to the financial system. The legislation would also bring financial derivatives under government oversight and empower officials to seize the biggest financial firms if they face collapse.
Treasury Secretary Timothy F. Geithner on Monday escalated his attacks on banks that oppose the financial overhaul. He warned that the administration could unilaterally impose far stricter rules on the industry if the legislation falls short in Congress.
"If we fail to enact reform legislation here at home, we will be forced to use the limited and inadequate authority we have," Geithner said at a conservative think tank in Washington. He said the administration, in consultation with regulators, could impose higher capital requirements -- the amount of money banks must keep in their reserves to protect against unexpected losses. That would eat into their profits.
"To protect the American economy from the failures of the existing system, we will have to consider forcing parts of the financial system -- the parts we can regulate -- to operate with higher capital . . . than would otherwise be necessary," he said.
The Senate committee vote, which capped a hearing that lasted a mere 21 minutes, marked an abrupt acceleration and was applauded by administration officials, who have been eager to move the legislation forward after months of informal discussion among lawmakers. The committee action came three months after the House passed its version of a financial regulation bill.
"We are now one step closer to passing real financial reform that will bring oversight and accountability to our financial system and help ensure that the American taxpayer never again pays the price for the irresponsibility of our largest banks and financial institutions," Obama said in a statement.
Dodd had said earlier that he planned to spend the week considering revisions to his bill. But in voting on his bill, the committee's 23 members -- 13 Democrats and 10 Republicans -- did not consider any of the major changes that lawmakers from both parties had proposed in recent days.
Republicans did not protest Dodd's decision to send the package to the Senate floor. GOP lawmakers had crafted hundreds of amendments for the committee to consider and submitted them late last week. But with Republicans on the committee lacking consensus among themselves on some issues, Sen. Richard C. Shelby (Ala.), the ranking Republican, decided to forgo action on the proposed amendments. He plans to negotiate with Dodd behind closed doors.
"It brings us a step closer," Dodd said of the quick committee vote. He added that a prolonged debate on the committee could have led lawmakers' positions to harden, reducing the prospects of consensus.
"This allows us to buy some time, if you will, to work on the product we need to present to our colleagues as a whole. And that's an advantage," he said.
Shelby said he hopes the two men can find middle ground. "We're not polarized today," he said. "We're not going to the floor polarized; we're going to the floor right now in the spirit of trying to work a consensus bill, a meaningful, substantive bill that I've said all along that we need."
In recent weeks, Dodd had sought to negotiate a bipartisan deal with Sen. Bob Corker (Tenn.), but he ultimately forged ahead without the freshman Republican. Corker made it clear that he was disturbed by the committee vote.
"It is pretty unbelievable that after two years of hearings on arguably the biggest issue facing our panel in decades, the committee has passed a 1,300-page bill in a 21-minute, partisan markup. I don't know how you can call that anything but dysfunctional," Corker said. Yet he said he remains optimistic that "we can still get to a bipartisan bill before we get to the [Senate] floor."
The committee vote was sharply criticized by some advocates for the financial industry.
Edward L. Yingling, chief executive of the American Bankers Association, said the bill would impose harsh rules on traditional banks, putting them "at an even further disadvantage to non-banks and reduce the ability of our industry to support the economy."
But Ed Mierzwinski of the U.S. Public Interest Research Group, a leading consumer advocate, applauded the measure. "It's been over a year and a half since taxpayers bailed out the Wall Street bankers after their reckless actions ravaged our economy and cost us our jobs, our retirement income and our homes," he said. "The prospect of floor action, while overdue, is welcome."
Still, he added, the group will work to strengthen the bill by pressing for a free-standing consumer regulator outside the Fed and for all derivatives, hedge funds and private equity to be regulated without exception.
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