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Sen. Ted Kennedy’s death could shift the political winds for a reviled Wall Street.
If banking committee chairman Chris Dodd decides to assume the chairmanship of the Health, Education, Labor and Pensions Committee the next in line for the job would be South Dakota Sen. Tim Johnson – a third-term senator who’s one of the financial services industry’s biggest champions on Capitol Hill.
Although it’s unclear whether Johnson will take over the chairmanship — largely because of the health concerns he faces after surviving a severe brain injury in 2006 — the possibility of such a strong financial services ally winning the powerful post has banks, credit card companies, and insurers cheering.
“No one is pro-industry today but he’s been historically very receptive,” said a top financial services lobbyist. “He’s been sensitive to the impact of legislation on the financial service industry given the large number of jobs he represents.”
Johnson, say financial services lobbyists, is Dodd without the political baggage.
The Connecticut Senator – long a strong advocate for the industry – has adopted significantly more popularist tone as he faces the toughest reelection battle of his career. Over the past year, he’s pushed proposals cracking down on executive compensation, credit card companies, and increasing regulation of financial services firms.
But Johnson is considered one of the financial services industry’s biggest supporters – largely because of the large number of bank and credit card call centers located in South Dakota. Seven percent of the non-farm jobs in the state are generated by the financial services industry, according to his office, and Citigroup bases its credit card business in Sioux Falls.
"All banks deserve a level playing field," Johnson said in a speech before the 2006 American Banker's Banker of the Year dinner. "There is a very real danger that we are on the verge of placing large, internationally active U.S. banks at a serious disadvantage against foreign competitors, and even against U.S. consolidated supervised entities."
In May, Johnson was the only Democratic Senator to vote against a credit card bill putting strict new limits on rate increases and excessive fees. The legislation was championed by Dodd and signed into law by President Barack Obama in May.
The Democratic leadership is likely to back Johnson for the chairmanship. In 2008, after Johnson’s Republican challenger speculated that he could be passed over for the post, Senate Majority Leader Harry Reid issued a statement saying that he would get the committee if Dodd opted to step down.
But it’s not clear that Johnson would accept the job. Democratic aides speculate that he may opt to spilt his duties with the third most senior Democratic Senator on the committee, Rhode Island Sen. Jack Reed, who has a more liberal record on banking issues.
“This is a moment to mark the passing of Senator Kennedy and his storied career, not the start of a political chess game,” said Johnson spokeswoman Julianne Fisher, who refused to comment on Johnson’s ambitious.
Johnson would take the helm as the committee undertakes one of its biggest projects in decades: overhauling the financial regulatory structure in the wake of one of the country’s biggest economic meltdowns.
Staffers on the committee are expected to begin holding meetings on various regulation proposals in September and aim to pass the bill by the end of the year.
The bill would be a tough legislative lift for even the most savvy of lawmakers. A low-key moderate like Johnson, say lobbyists, likely lacks the charisma needed to muscle such a huge piece of legislation through the Senate – particularly as the contentious health care reform bill sucks up all the bandwidth on Capitol Hill.
Last year, Johnson and other South Dakota lawmakers lobbied the Federal Reserve and the Office of Thrift Supervision to tone down tough, new rules for credit card companies.
“We have concerns not only about consumers across the nation not having access to credit and the potential negative effect on the national economy, but in particular about the potential economic impact on South Dakota,” wrote Johnson in a 2008 letter to the agencies. “The effects of the proposed regulations could heavily impact many jobs in South Dakota.”