Senator Who Opposed Credit-card Measure May Head Banking Panel
The current chairman, Connecticut Democrat Christopher Dodd, announced yesterday he wont seek re-election this year. His replacement by Johnson, who underwent brain surgery three years ago, would turn the panels leadership over to a lawmaker from a rural state dominated by small community banks. Johnsons home state is also the headquarters of Citigroup Inc.s credit-card operation.
With Democrats expected to retain their Senate majority after this years midterm election, Johnson “is ready to assume the role” of banking committee chairman next January, Julianne Fisher, a spokeswoman for the lawmaker, said yesterday. The lingering effects of his health problems “in no way affects his work,” Fisher said.
Johnson, 63, “doesnt have the same point of view on a lot of issues that Dodd does,” said banking analyst Bert Ely, so his ascension to the chairmanship would “represent change.”
Of Johnsons vote against the credit-card legislation, which became law in May, Ely said, “The credit business is a major employer in South Dakota; he is obviously sensitive to that.”
Partly because of his opposition to the measure, “my sense is that Senator Johnson is not believed by consumer advocates,” said Sally Greenberg, executive director of the National Consumers League, a Washington-based advocacy group.
Financial Regulation
Dodd has been crafting legislation to overhaul federal regulation of financial institutions. The U.S. House last month passed its version of the measure, which President Barack Obama has set as a priority, and Dodd in his chairmanships role will continue to play a leading part in trying to pass a final bill this year.
As debate proceeds on the issue, Johnson will likely fight to protect community banks from tighter controls or being covered by a proposed Consumer Finance Protection Agency, Ely said.
He said Johnson “will be sympathetic” to the small banks argument that they shouldnt be subject to the same “tightening of regulation” as big banks, whose lending practices helped precipitate the 2008 financial meltdown and subsequent government bailout.
Even-Handed Approach
“Senator Johnson understands community bank issues” and “that should create an atmosphere where he could be very even- handed in his approach to financial legislation,” said Camden Fine, president and chief executive officer of the Washington- based Independent Community Bankers Association.
At a Banking Committee hearing Nov. 19, Johnson voiced the concern of the small-bank constituency. Regulatory overhaul legislation must “strike the right balance that strengthens regulation where needed, but doesnt unnecessarily harm community banks and credit unions who were not the cause of the financial crisis,” Johnson said in a statement prepared for the hearing.
Johnson won support last September from Senate Majority Leader Harry Reid, a Nevada Democrat, for becoming banking committee chairman. At the time, Dodd was considering relinquishing the post to take over another chairmanship vacated by the death of Democratic Senator Edward Kennedy of Massachusetts. Dodd, 65, decided to stay in his post and remain focused on the financial regulatory legislation.
Brain Surgery
Johnson in December 2006 underwent surgery to treat a malformation of blood vessels in his brain and relieve bleeding. After extensive therapy to regain his speech, he returned to the Senate floor to address his colleagues in September 2007. He still speaks with some difficulty and uses a power chair to come and go from the Senate floor.
He won his third Senate term in 2008 with 62 percent of the vote.
The credit-card bill that Johnson opposed last year passed the Senate on a 90-5 vote, with four Republicans also voting against it. The measure put stricter limits on the fees and contract changes credit-card companies can impose. The law also requires the companies to apply payments to the portions of unpaid balances that carry the highest interest.
Johnsons Rationale