Washington

Sen. Chris Dodd, D-Conn., and Sen. Byron Dorgan, D-N.D., both key allies of the insurance industry in Congress, announced they will leave the Senate at the end of their terms.

The decision immediately touched off speculation that the two senators made the decision out of concerns about voter backlash against the party in power because of a continuing weak economy.

"Today's announcement…highlights just how vulnerable both Senate and House Democrats have become since deciding to walk in lockstep with President Obama's government-run policies," Republican National Committee Chair Michael Steele said in a statement.

Concept Capital analysts in Washington, D.C., said they believe Sen. Tim Johnson, D-S.D., will likely be named chair of the Senate Banking Committee to replace Sen. Dodd. But because Sen. Johnson suffered a cerebral hemorrhage in late 2005, it is expected that Sen. Jack Reed, D-R.I., will be given an important subcommittee chair and extra staff to help Sen. Johnson run the committee.

Sen. Dodd's public support has declined in the wake of criticism he is too close to financial interests, and because he accepted a below-market-rate mortgage loan from Countrywide Financial Corp., a troubled mortgage lender since acquired by BankAmerica Corp.

He acknowledged that strong criticism of the loan, plus complaints from right-wing Republicans that he is responsible for the insolvency of mortgage lenders Fannie Mae and Freddie Mac, had left him in the toughest political shape of his career.

However, he said there were other factors, including a diagnosis of prostate cancer last August and the death of his sister and Sen. Edward Kennedy, D-Mass.

"Now let me be clear–I am very aware of my present political standing here at home, but it is equally clear that any certain prediction about an election victory or defeat nearly a year from now would be absurd," he said. He added that "strange as it may sound, I'm not confident I would be standing here today making this announcement if these situations [the other events] had not occurred.

"None of these events or circumstances either individually or collectively is the cause of my decision not to seek re-election," he said.

Ken Crerar, president of the Council of Insurance Agents and Brokers, lamented the loss of an industry ally on Capitol Hill. "It's disappointing to imagine the Senate without Chris Dodd," said Mr. Crerar, who worked for Sen. Dodd when he served in the House.

"Not only has he represented the state supremely well, he's been very, very responsive for many years to the needs and concerns of the insurance industry–historically the leading employer in Connecticut. I'm grateful to have had him as a mentor," said Mr. Crerar.

"In the short haul, though, I know that Senator Dodd won't be considered a lame duck," Mr. Crerar remarked. "He has an enormous reservoir of good will from fellow senators, is working well on a bipartisan basis in managing the difficult regulatory reform proposals, and he will complete his legacy this year in a responsible manner. I'm sure of that."

Sen. Dodd is serving his fifth term in the Senate. He has chaired the Senate Banking Committee since 2007.

Industry observers said Sen. Dodd's decision was unlikely to affect negotiations within his committee for bipartisan financial services reform legislation.

Sen. Dodd has scheduled a Jan. 26 markup of such legislation, and has designated two-member teams from his committee to deal with specific issues–for example, insurance.

In a note to investors, Concept Capital said: "In our view, [Sen.] Dodd's announcement is a neutral for financial services companies, as we do not expect it to impact financial reform legislation."

"[Sen.] Dodd already was going to have to compromise with Sen. Richard Shelby, R-Ala., if he wanted to enact the bill. His decision to retire after the election does not alter this equation," Concept advised.

Richard Blumenthal, the longtime Connecticut attorney general, is the leading candidate for Sen. Dodd's Senate seat. Mr. Blumenthal, a Democrat, in confirming his planned run for the office told Bloomberg News he favors a consumer financial protection agency and would focus on jobs and the economy.

Sen. Dorgan, who was serving his third term, is also a senior Democrat in the Senate who supported insurance industry positions on taxes and other financial issues.

Sen. Dorgan's wife, Kim Dorgan, is senior executive vice president for public policy at the American Council of Life Insurers, its top lobbying position.

MSNBC television host Ed Schultz has confirmed to political publications that national Democrats have asked him to run for Sen. Dorgan's seat. However, the favorite for the seat is the state's popular Republican governor, John Hoeven.

Sen. Dorgan's announcement led to immediate speculation that Rep. Earl Pomeroy, D-N.D.–a former state insurance regulator and one-time president of the National Association of Insurance Commissioners–might be the Democratic candidate to replace him.

At the same time, Kevin Cramer, the state's public service commissioner–who ran and lost against Rep. Pomeroy twice–said he is considering taking on Rep. Pomeroy because he sees the tide running against Democrats in Congress. Rep. Pomeroy was not available for comment.

Special Reports /

Insurance Industry Losing Two Senate Allies

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