Kennedy's Passing Could Lead to a More Bank-Friendly SenateAugust 27, 2009 - by Donny Shaw
The death of Sen. Ted Kennedy is going to cause some committee chairmanship shuffling when the Senate reconvenes in September. Kennedy was the Chairman of the Senate Health, Education, Labor and Pensions Committee (HELP), but in recent months Sen. Chris Dodd [D, CT] has been filling in for him as the committee takes on healthcare reform. Based on the system of seniority that is traditionally used, Dodd is next in line to take over Kennedy’s HELP Committee gavel.
Currently, Dodd is Chairman of the Senate Banking Committee. If he takes the HELP Committee chairmanship he would have to give up his Banking gavel. In the coming months, as Congress considers the Obama Administration’s proposals to regulate the financial industry, the Banking Committee is going to play a central role. The chairman of the committee will probably be the most influential player in all of Congress in deciding how tough the bill that eventually gets signed into law will be on the banks.
According to seniority, Sen. Tim Johnson [D] of South Dakota would be next in line to take over as the Banking Committee Cairman. South Dakota, as you may recall, is one of only two states in the nation that has no laws against usury, meaning that banks that are chartered there can charge any amount of interest they want on loans and credit cards. And since the Supreme Court ruled in 1978 that big national banks don’t have to follow state usury laws for each of the states they do business in – just the law for the state they are incorporated in – lots of the big banks have officially incorporated themselves in South Dakota. Not surprisingly, this has made Sen. Johnson the most bank-friendly Democrat in the Senate.
Here’s a quick look at some of the votes he has taken since this session of Congress began in January that illustrate his pro-bank position:
- H.R. 627 – the Credit Cardholder’s Bill of Rights: Restrict unfair credit card rate increases, penalties and fees, and bans deceptive and predatory practices.
Sen. Johnson was the only Democrat who voted “no” on passage of this bill.
- S.Amdt.1014 – Cramdown Amendment: A central component of Obama’s foreclosure prevetion plan, this amendment would have given bankruptcy judges the ability to renegotiate at-risk mortgages for homeowners in cases where the banks wouldn’t agree to renegotiate voluntarily.
Sen. Johsnon was one of 12 Democrats to vote “no” on this amendment.
- S.Amdt.1062 – Usury Amendment: This amendment would have set a nation-wide cap of 15 percent on interest rates, with exceptions in cases where the Federal Reserve determined that the cap would threaten the safety and soundness of financial institutions.
Sen. Johnson was one of 21 Democrats to vote “no” on this amendment.
- S.Amdt.875 – Federal Reserve Transparency Amendment: This amendment would have required the Federal Reserve to disclose information about which banks have received the trillions of dollars in loan guarantees they have made since the financial collapse in October 2008.
Sen. Johnson was one of 18 Democrats to vote “no” on this amendment.
Now, it’s possible that Sen. Johnson won’t take the chairmanship if it is offered to him. Johnson still has not fully recovered from a brain injury he suffered in 2006 and he has been keeping a relatively low profile. Next in line after Johnson for the chairmanship would be Sen. Jack Reed [D, RI], who is much more of a typical Democrat on financial matters. It’s also not a sure deal that Dodd will leave the Banking Committee for the HELP Committee, though it seems very likely. Rumor has it that there is pressure from the Administration for Dodd to take the position, and with his tough re-election looming, I’m sure Dodd will want his name as closely affiliated to healthcare reform as possible.
UPDATE: Paul at the Sunlight blog has more on Senator Johnson favoritism towards the banks from the campaign money/lobbyist connections perspective.