Democratic Connecticut Senator Chris Dodd may have been out of his element when he spent a year on the campaign trail running for president in 2007 and early 2008.
He spent perhaps $5 million, some of it raised from companies and trade groups that have business before the Senate Banking Committee he heads, and he came back to Washington, his head between his knees, without garnering a single delegate for his labors.
And he may also have used poor judgment when he took a mortgage loan from a special program provided Washington insiders and others from Countrywide Financial, the now-humbled mortgage originator.
But, to borrow a phrase used so correctly by Robert Caro in his excellent biography of the majority leader career of Lyndon Johnson, Dodd is clearly a “master of the Senate.”
Whatever Dodd’s shortcomings, he is a charter member of the Senate’s inner circle, someone who understands and can translate its internal workings into accomplishments for his constituents. There is an ebb and flow to this august body that takes years to master.
Therefore, Dodd’s decision several days ago to announce that he will retain the chairmanship of the Senate Banking Committee to help it slog through a restructuring of financial services regulation that will likely take up all of next year was a courageous and appropriate one.
Dodd wanted off Banking and onto the Foreign Relations Committee if an opening developed because he was frustrated and depressed over the huge loss of insurance jobs over the last several years in his beloved Connecticut. [The opening on Foreign Relations occurred because Sen. Joe Biden, the current chairman, was elected vice president.]
Consolidation, heavy losses from 9/11, asbestos, environmental and malpractice claims, and strong competition from banks and securities firms have taken a mounting toll on Connecticut’s insurance companies.
This was felt most deeply by Dodd, who used to openly boast that he was Sen. Insurance and was highly effective in representing insurance interests in such high-stakes legislation as bills curbing securities lawsuits during the Clinton administration, Gramm-Leach-Bliley in 1999, and the Terrorism Risk Insurance Act of 2002, among others, his “liberal,” consumer-oriented reputation notwithstanding.
But, with the Connecticut insurance industry deeply affected by the fallout from the current financial tsunami, Dodd did not hesitate to prove that all politics are local.
Let it not be said that insurance is his sole interest. Connecticut is also the headquarters for some of the nation’s leading hedge funds, and protecting them amidst a clear mandate to strongly regulate all things financial is certainly a factor in his decision. It is not only life insurance, property-casualty insurance and health insurance firms and agents that have strong roots in Connecticut.
But insurance is clearly a favorite. At a recent hearing on insurance regulation before his committee, Dodd acknowledged that “a few years ago, even the notion of a federal charter would have been met with vehement opposition. It was the third rail.”
But problems among insurers, growing efforts by them to be included in the Troubled Asset Relief Program, and the astonishing need to bail out American International Group, at a cost that has now risen to $150 billion, will certainly provide a strong public mandate for far greater federal oversight of insurance activities. Federal money doesn’t come cheap. And, AIG, too, has extensive offices in Connecticut.
Given the stakes and his experience, Dodd is the right man to look out for insurance interests as a new Congress and a new administration–armed with a strong mandate to improve regulation–start work in earnest.
Dodd has been there, done that, and, in a term he uses frequently, knows how to flourish in the “weeds”–in the staff meetings, negotiations with fellow committee members, on the floor as a manager of legislation, and in something that has been missing during the period of Republican ascendancy but may be revived, reconciliation panels.
Anything goes in these panels, and Dodd has the experience, the energy and the goodwill needed to ensure that in crafting legislation that will affect insurance regulation going forward for 10 years or more, the insurance industry’s voices are heard.