Sen. Christopher Dodd, the chairman of the Senate Banking Committee and a key voice on hedge fund regulation and other financial reform efforts, will not seek a sixth six-year term this year.
Dodd, a Democrat, had been seen as among the most vulnerable incumbents in this year’s midterm elections. The president’s political party tends to lose seats during such elections, and Dodd has received withering criticism for being too close to the financial industry titans blamed for causing the economic crisis, and for being too friendly with Connecticut’s powerful hedge fund industry.
In particular, Dodd was blasted for taking a loan from subprime mortgage firm Countrywide Financial, and for allegedly smoothing the way to allow American International Group executives to receive large bonuses after the insurance company received billions in government bailout money.
Dodd has been one of the biggest recipients of Wall Street and hedge fund cash in the form of campaign contributions. But, perhaps in light of the criticism of him, he has been much more actively pushing strict supervision of the hedge fund industry in recent months.
With Dodd bowing out, Connecticut’s popular Attorney General Richard Blumenthal has tossed his hat into the ring. Blumenthal, who is also a Democrat, is seen as giving the party a much stronger chance of holding the seat in November. He’s also likely to give hedge funds a much harder time than Dodd; Blumenthal, along with Massachusetts Secretary of the Commonwealth William Galvin, has been among the industry’s most prominent critics.