Yesterday, benevolent editor Mark and I went back and forth over the benefits of Sen. Chris Dodd's retirement. While I'm willing to concede to Mark that Dodd was a great senator, the simple fact is that Dodd wasn't going to be in his seat next year no matter what he did. In retiring, he was, as Matt Yglesias put it, "actually exhibiting a ton of integrity—doing the right thing for his country, his party, and the progressive political movement." That's why this decision is both a good and a sad thing.But all is not lost! Dodd is still in his seat for another year and happens to have a seriously legacy-defining piece of legislation in front of him, creating an opportunity for both Mark and me to be proved right. Dodd is a heck of a legislator, and freeing himself up from campaign pressure will give him a chance to display his talents. As chair of the Senate Banking Committee, Dodd is managing the Financial Regulatory Reform bill in the Senate. This Washington Post piece suggests that, as you'd expect, the bill's chances of passing have increased since Dodd's announcement because the senator won't be pursuing a tough campaign. Instead, he'll be focusing on the policy and working with ranking member Richard Shelby to get a good bill out of committee.
Dodd's got a hard row to hoe, with several Democrats and most Republicans opposed to the Consumer Financial Protection Agency, perhaps the most important part of Congress' efforts. That's just one of dozens of complex issues in the bill that face conservative opposition. As well, the Senate approach differs substantially from the House's approach in execution (if not theory) and requires plenty of inter-chamber massaging. Dodd will have to work to make the bill good policy and not just a gesture; more restrictions on derivatives, strong dissolution authorities, and more focus on regulating leverage and increasing capital requirements are all needed. Dodd could also do worse than to gain some bipartisan support by including a bill co-sponsored by Republican John McCain, along with Democrat Maria Cantwell, that would re-instate the Glass-Steagall Act that separates commercial banks from riskier investment banks.
Dodd has always been somewhat hidden in his old friend Ted Kennedy's shadow -- which gave him some advantages, as Mark noted -- but if he manages to produce an effective regulatory reform bill in the same year health-care reform, which also bears his fingerprints, passes the Senate, it will be a legislative achievement for the ages. And one thing's for sure: If he doesn't get good financial reforms in place this year, next year, with Tim Johnson as chair, will be much worse.
-- Tim Fernholz
