What if Democrats Win? Spotlight on Finance

By Bill Swindell, CongressDaily© National Journal Group Inc.Friday, Oct. 20, 2006
This is the fifth in a series of articles exploring the impact on key committees and issues if Democrats win control of the House and Senate in November’s elections.
If the Democrats win a Senate majority next month, Sen. Christopher Dodd of Connecticut will take the helm of the Banking Committee as Banking ranking member Paul Sarbanes of Maryland retires. The change will be noticeable: Sarbanes takes a cautious, almost scholarly approach to crafting bills and is not known as press friendly. By contrast, Dodd is one of the more quotable members of Congress, with a keen eye to looking out for his home state’s interest while willing, at times, to buck his party.
Dodd has sided against his party at times in favor of business interests -- but also has a populist streak in protecting consumers and investors.

A Dodd chairmanship would be a boon to the insurance industry as Connecticut is home to such companies as Aetna, The Hartford Financial Services Group and W.R. Berkley Corp. Dodd has been a leading proponent for the federal government’s terrorism risk insurance program, which expires at the end of 2007, and is expected to be an advocate for continuing the federal backstop despite opposition from the White House that favors a free-market approach.
Dodd also has sided against his party at times in favor of business interests. For example, he backed a 1995 law that restricted shareholder lawsuits against public companies, which cleared despite a veto from President Clinton. The U.S. Chamber of Commerce contends trial lawyers are attempting to skirt the law and that further changes are needed. Dodd has said the Banking panel should hold a hearing on the issue. But he also has a populist streak in protecting consumers and investors, such as introducing legislation prohibiting deceptive lending and credit card marketing practices.
“It would do away with a lot of most abusive practices that consumer groups have seen. He’s been clear that he’s been very concerned about credit card industry practices,” said Travis Plunkett, legislative director for the Consumer Federation of America.
In the House, Rep. Barney Frank of Massachusetts would become chairman of the Financial Services Committee. While Frank has burnished a reputation of a liberal who is eager to battle conservatives in debate on the House floor, on the panel he has worked in a mostly bipartisan fashion with Financial Services Chairman Oxley. Frank wants to continue such tradition, though with a focus on some issues that have not received as much attention under GOP control, specifically housing issues. Frank said he would work with Rep. Charles Rangel, D-N.Y., who would take over the chairmanship of Ways and Means, to expand low-income tax credits and better coordinate federal programs to boost affordable housing units.
“Right now, if you want to do affordable housing, there is some production through the affordable housing tax credit and there are some other programs, but you really have to twist yourself into knots to make them work together,” Frank said. He also said Democrats would fight to preserve the number of federal housing vouchers, complaining that federal rules are often too punitive.
Frank also has expressed interest in bringing more oversight to the trillion-dollar hedge fund industry. He has sponsored legislation that would authorize the registration and monitoring of hedge funds, reversing a recent federal court decision that barred SEC efforts to regulate the industry through its own rulemaking. He also has been a leading proponent of reining in industrial loan companies, which are state-chartered banks that offer limited financial services but are not subject to Federal Reserve supervision. Critics complain that the growth of the industry, especially bids by Wal-Mart and Home Depot to acquire their own ILCs, poses a safety and soundness risk to the nation’s banking system.
On insurance matters, many lobbyists believe Frank will allow Rep. Paul Kanjorski, D-Pa., to take the lead on the issue as he would assume chairmanship of the Capital Markets Subcommittee. Kanjorski has expressed some skepticism of legislative efforts to allow insurance companies to be regulated under a new federal agency rather than the current state-based system.