Capping Career, Dodd Relishes Fight For Financial Reform

Senator Chris Dodd emerged from the Democrats' weekly policy lunch Tuesday and spied a wall of reporters waiting to talk to him. He paused and gave a little smile before stepping forward into the limelight. "One at a time, people," the Banking Committee Chairman cautioned as reporters launched a barrage of questions on the state of a sweeping bill overhauling regulations governing Wall Street.

Although a few hours later Republicans would, for the second time in two days, move to block debate on the bill, Dodd (and, indeed, many Republicans) says a deal is close. At stake is legislation aimed at preventing another financial crisis like the one the country just weathered and, 18 months later, is still struggling to overcome. Dodd is careful to say that no bill can stop economic downturns. "There'll be some other bubble that'll emerge at some point and the point is to not leave the country reeling when those events occur," Dodd said in an interview Tuesday morning. To that end he has proposed tightening regulations on derivatives, creating a risk arbitrator to monitor systemic risk and establishing a consumer protection agency to police bank transactions. Democrats accuse Republicans who oppose the bill of being in the pocket of Wall Street. "I'm still mystified by the reaction of our colleagues," Dodd thundered on the Senate floor Tuesday afternoon. "We've seen the thundering hoards of Wall Street lobbyists descending on this community, paid millions of dollars to do everything they can to stop this, including the motion to even proceed to debating the bill. They've had a victory. Congratulations, Wall Street lobbyists."

Dodd may have public anger about Wall Street bailouts and misbehavior on his side — especially with Goldman Sachs getting grilled on Capitol Hill Tuesday on the subject of its SEC fraud charges — but he is walking a fine line: negotiating behind closed doors with his GOP counterpart, Alabama's Richard Shelby, on a compromise while publicly lambasting Republican reticence to let the debate begin. Republicans argue that crucial changes are still needed, and they'll lose an important bargaining chip if they allow debate to start before the fixes are made. The GOP would like to remove a $50 billion fund drawn from new bank fees to pay for liquidating failing firms; they want to see rewritten provisions dealing with banks that are deemed "too big to fail"; and they're extremely leery of the proposed consumer protection agency, which they claim would have too broad powers over Main Street businesses that extend credit. Is Shelby annoyed at Dodd's public posturing? Not at all. "I've worked with Chris Dodd on the Banking Committee going on 15 years," Shelby says with a laugh. "He has a great sense of humor, he's a great guy."

The Connecticut senator's approach may seem puzzling at times, but it is quintessential Dodd. A man of apparent contrasts, he appears one way in public and another way behind closed doors - sometimes to his detriment. He's a bombastic partisan on the Senate floor who behind the scenes is popular with the other party; until this year Dodd had never passed a big piece of legislation — from the Family and Medical Leave Act and groundbreaking childcare legislation to the Help America Vote Act after the 2008 elections — without GOP support. At the height of the mortgage crisis, Dodd convinced Shelby to sign on to a government takeover of floundering Fannie Mae and Freddie Mac; yet since 2003 Dodd himself had accepted what many viewed as special treatment on his two mortgages from one of the worst subprime offenders, Countrywide (Dodd denies that he received any kind of sweetheart deal and says he was ignorant of being treated any differently than an average person; the Senate Ethics Committee also dismissed the allegations of any wrongdoing). Always quick to claim he is standing up for the little guy, Dodd went after Wall Street executive compensation and the credit card companies, but he refused to give back campaign contributions from banks bailed out by the government, even after his House counterpart renounced such donations as a conflict of interest. And the warring personas took their toll: after nearly 30 years in the Senate, Dodd announced in January he would not seek a sixth term this November when polls showed him losing to three different GOP opponents.

Dodd had already been working on the financial overhaul bill for more than a year when he announced his retirement. Some observers speculated that he might move the bill more to the right — after all, for all the populist bills Dodd has passed, he comes from a state known for its insurance industry (Hartford) and hedge funds (Stamford/Greenwich). Dodd was pivotal in repealing depression-era regulations on banks in the 1999 Gramm-Leach-Bliley Act. Rumors swirled that he'd cash out and go work for Wall Street or the insurers. But Dodd, instead, has doubled down on Main Street. When asked about banking lobbyists grumbling about his populism, Dodd bristled. "They bring valuable information to a debate, a discussion and I know that they don't like a lot of this: they want the world to stay as it is and it's not and it shouldn't," he says. "These people don't make anything, they don't manufacture anything, it's all an inside game and that's one of the problems. They don't like the bill, that's their business, but branding people populist, I find that shallow."

Freed from the typical reelection considerations, Dodd seems to be relishing the fight. He bounded right from the health care bill — he took over negotiations for Ted Kennedy when the Massachusetts senator was diagnosed with a fatal brain tumor, and was one of the leaders in pushing it through — to the financial reregulation legislation practically overnight. Dodd "has got this huge smile on his face all the time now," says Jim Manley, a senior adviser to Senate Majority Leader Harry Reid. "I tell his staff: he's the happy warrior."

Ironically enough, Dodd is stepping down at apex of his power: chairman of the Banking Committee, interim chairman of the Health, Education, Labor and Pensions Committee and, briefly, chairman of the Foreign Relations Committee. But when asked if he views the sweeping financial reregulation bill as his swan song, Dodd does a double take. "I'm not dying!" he laughs. "There was a great Irish tenor back in early 20th century named John McCormack and he quit singing right at the height of his career and people said to him why are you quitting singing? And he said I'd rather be asked why are you quitting than why haven't you quit." But watching Dodd huddle with Shelby earlier this week, one of his Democratic colleagues wistfully remarked: "I wish he weren't leaving; there are so few deal makers left."