Longtime U.S. Sen. Christopher Dodd will not seek re-election this year and will retire at the end of the 2010.
“This is my moment to step aside,” Dodd said Wednesday during a news conference at his home. (Read his full statement.)
Heads a powerful committee
The Connecticut Democrat is chairman of the Senate Banking Committee. If you’ve followed credit card and financial reform as closely as I have over the past two years, you’ll know that no significant changes in credit card and banking rules happen without first going through this powerful Senate committee.
The chairman controls the agenda and decides if a particular bill bubbles up for scrutiny and a vote or dies in obscurity. There have been dozens of credit card related bills introduced over the past two years — covering everything from capping credit card interest rates to limiting interchange fees charged to merchants. Only a fraction have made it onto the banking committee agenda. Of course, that’s how the political system works. Not every bill gets the spotlight.
Love him or hate him (and many people have opinions on both sides if you read these comments posted on the New York Times article), Dodd helped push the most sweeping credit card reform measures in decades through the U.S. Senate in 2009.
Sure, the Credit CARD Act of 2009 isn’t perfect. Credit card companies can still close your account at any time without advance warning, use universal default to hike interest rates on future transactions (but not existing card balances) and, the biggie, charge whatever interest rate they like on an account.
Deserves thanks from Americans
The Consumer Federation of America issued a statement saying Dodd’s retirement means: “Americans will unfortunately lose the Senate’s leading and most effective champion for protecting consumers from abusive financial practices.”
Some may argue Dodd didn’t do enough to push for stronger reforms and listened too much to banking interests, citing his involvement in the Countrywide loan scandal where he and other prominent people got favorable home mortgage terms from former Countrywide chief Angelo Mozilo. It’s no secret that Dodd and other senators got big campaign contributions from banks and credit card issuers, as my colleague Tyler Metzger illustrates in his blog about 2008 political action committee cash.
More work to be done on credit card reform
Dodd acknowledged during debate on the credit card reform law that more work needed to be done to adequately protect consumers. He’s right. The question is, now that he’s leaving, who will spearhead the effort?
According to the Wall Street Journal, South Dakota Sen. Tim Johnson is next in line to take over as chairman when Dodd leaves if the Democrats continue to control the Senate. This does not bode well for those hoping to continue banking and credit card reform. South Dakota is a plastic state — that is, several credit card processing units of major banks (Citi Group’s card unit and customer service center, for example) call South Dakota home. It’s a bank-friendly state that does not cap interest rates on credit cards.
As Ruth Susswein, deputy national priorities director for the Consumer Action consumer group put it, having Johnson head the Senate banking committee, “is not good news on the credit card front, which makes sense since he’s from South Dakota. He’s a good friend to the industry.”
When the full Senate voted 90-5 approving the credit card reform law on May 19, 2009, Johnson was the only Democratic among the five “no” votes. Here’s the official record of the vote.
Dodd said in his announcement he isn’t giving up the fight: “My service is not over. I still have one year left on my contract with the people of Connecticut.”
The banking committee is in the midst of considering a huge package of Wall Street reform measures aimed at preventing many of the problems that threatened to bring down the economy in late 2008. Among the key provisions of the legislation: creating a Consumer Financial Protection Agency (CFPA) that would serve as a watchdog over credit card issuers and banks.
The U.S. House passed its version of the financial reform bill Dec. 11, 2009. Dodd is working with Senate Republicans on compromise language to help garner votes.
Both House and Senate reform packages are watered down versions of the Obama Administration’s consumer financial protection agency proposal released in June 2009. The banking industry lobbying group, the American Bankers Association, issued a five-page statement Jan. 5, 2010, saying, “Banks of all sizes across the country continue to oppose the Administration proposal on the CFPA.”
With Dodd heading out, we have to wonder what that final reform bill will include.
Adds Susswein from Consumer Action: “The good news is that the credit card law has passed and will take effect in February. Some of the most important changes are already law. There’s always more to be done. It’s very helpful to have a leader in the Senate that’s on the side of consumers and not clearly on the side of banks.”
See related: A comprehensive guide to the Credit CARD Act of 2009, Credit card reform legislators bite the hands that feed them