As a major player in the regulatory schemes that helped bring the housing and finance markets to their knees and ushered in the existing economic crisis that confronts us today, the doldrums that Dodd was wading into among Connecticut voters was well deserved. As Chairman of the Senate Banking Committee Chris Dodd, along with his counterpart, Chairman of the House of Representatives Committee on Banking, Barney “Elmer Fudd” Frank of Massachusetts, led the way for Fannie Mae and Freddie Mac to issue an unprecedented level of trillions of dollars in low-risk investments that were only sustainable if real estate prices continued rising.
The advice and circumstances prompted Republicans in 2006 to sponsor new regulations that would have placed the two housing lenders under strict requirements that would have severely limited their ability to take excessive risks and would have corrected illegitimate recording practices that they were participating in. They would have also averted financial ruin.
The problem is that real estate prices ceased to rise and started to fall. By the time this reversal took place, it was too late. The lack of liquidity that stemmed from an inordinate amount of defaults on an overextended volume of sub-prime loans began to tighten up the lending of money throughout the entire banking system. This spurred the worldwide credit crunch and economic crisis that was born.
It did not have to happen.
In 2005 Alan Greenspan warned Congress of the urgent need to tighten regulations on the systemic abuse that Fannie Mae and Freddie Mac were partaking in. Before Congress he testified that:
“if Fannie and Freddie continue to grow, continue to have the low capital that they have, continue to engage in the dynamic hedging of their portfolios, which they need to do for interest rate risk aversion, they potentially create ever-growing potential systemic risk down the road,” he said. “We are placing the total financial system of the future at a substantial risk.”
Chris Dodd rejected these corrective measures. And while refusing to adopt these regulatory measures, he was simultaneously collecting oodles of dollars from Fannie and Freddie and became the largest recipient of campaign contributions from the very entities that he refused to correct.
In other words, Dodd dodged efforts that would have helped to stem the troubling tide of the economic red ink and financial calamity that we found ourselves awash in during 2008. But poor policy alone was not enough to doom the potential reelection of Dodd in heavily Democrat Connecticut. After refusing to stem the economic crisis that Dodd and Democrats could have averted, the Connecticut Senator found himself in the key position of shaping the legislative bailout of Countrywide Financial Corp., a company that found itself needing bailout bucks after operating under the regulatory practices that Dodd refused to reform.
But this brought rise to an ugly conflict of interest. It was discovered that in two separate sweetheart deals, Dodd was the recipient of two cut-rate mortgages of nearly $800,000 from Countrywide Financial. The political favoritism that Countrywide afforded to the Chairman of the senate committee that oversees their business practices is seen as, to say the least, shady and Senator Dodd has not been forthcoming with the details of the arrangements. Instead, without remorse he promised to refinance the Countrywide deals, which would save him at least $70,000 over the life of the mortgages.
Then in February of last year, after bailing out AIG, Dodd slipped an amendment into the stimulus bill that ensured that executives of firms bailed out by the government could still collect already contracted bonuses. When this slight of hand came to light, Dodd denied doing it. An intense barrage of outright public indignation forced a glaring spotlight on Dodd until he finally admitted to being responsible for the amendment but ultimately he claimed that President Obama made him do it.
Now after being the first Democrat to throw his Democrat President under the bus, a slew of recent improprieties and slights of hand and a prior history of questionable real estate and financing schemes extending from as far back as 1986, Dodd was facing a very leery and disgruntled Connecticut electorate. At one point, with a negative rating for him of anywhere from 38% to 42%, voters in the Nutmeg State recently had Chris Dodd trailing his likely Republican opponent Rob Simmons by 9%.
It was looking as though Republicans had a great chance of picking up a senate seat in Connecticut. Dodd was considered one of the most vulnerable Democrats in the nation and Simmons was getting traction and raising a significant campaign war chest. But now, Dodds’ exit has paved the way for the state’s most prominent and popular Democrat to run. Long serving state Attorney General Richard Blumenthal will now seek the Party’s nomination. He will also win it and most likely go on to win the general election in November.
Republican Bob Simmons is a good candidate and although I do not wish to diminish his candidacy, Blumenthal is too popular and too well established in this heavily Democrat state. Unless there is a 1994-like Republican Revolution and Blumenthal takes some outrageously extreme liberal positions along with a skeleton in his closet that has yet to be unveiled, the Nutmeg State’s blue blood is not likely to turn Republican Red.
The only Republican who could make the race more competitive than Simons would be Republican Governor Jodi Rell.
Rell recently decided to not seek reelection. The decision was not based her election chances. It was a sincere desire to retire from public life.
Although Republicans are not in favor in Connecticut, Jodi Rell remains popular. She had approval rating in the 70’s. Currently they are down from that very high number to reasonably high numbers in the 60’s. But after serving 3 terms as Lieutenant Governor under her predecessor, popular Republican Governor John Rowland in 1994, 1998 and 2002, and assuming the office of Governor in 2004 after Rowland was convicted on corruption charges, Rell won the office in her own right in 2006 with an astounding 63% of the vote. With it looking like a good year for Republicans, nationally, Rell was probably the best hope that Republicans had to keep the Executive Office in Connecticut and would be the best chance to put Dodd’s seat into Republican hands against Blumenthal if she ran for the U.S. Senate..
A Rell-Blumenthal race would be interesting and probably a nail biter, but Governor Rell is not likely to retire from one office to seek another.
The Dodd decision simply is the latest example of Democrats realizing their fate. However, his decision not to run will turn out to be the best thing Democrats could ask for. Chris Dodd was not going to win. He knew it and the Democrat leadership knew it. But retiring and rejecting an attempt to secure a sixth term in office, Democrats will now run with a much stronger candidate in Richard Blumenthal and are likely stop some of the electoral hemorrhaging that they are expecting in November.
Although Connecticut may remain in Democrat hands, many other seats are looking to be uphill battles or outright losses for Democrats.
The prospect of keeping the magical number of a 60 seat, filibuster proof senate majority while defending 13 incumbents and open seats in Illinois, Florida, Delaware and now in North Dakota, will give Democrats ogida.
No matter what, a loss of just one of those seats will put an end to the partisanship of the Democrat regime. Without 60 senate seats, there will be no more nuclear option available to Harry Reid or whomever the next Democrat leader of the senate is. Reid himself is down in the polls and might be a loss for Democrats. Then there is also Arlen Specter in Pennsylvania who will have a tough time convincing Democrats that he is the best man for the job. Those possible losses are bad enough but the nail in the Democrat coffin will most likely be North Dakota.
Like Dodd, North Dakota Senator Byron Dorgan was going down but unlike the situation in Connecticut where a stronger Democrat could take his place, North Dakota has no stronger Democrat candidate. Add to that a changed environment that is favoring Republicans and what you have is at least one sure loss and a need for Democrats in 2011, to try to be a little less partisan as they find themselves having to work with Republicans and in need of their votes.
Back in July of 2009, POLITICS 24/7 wrote:
It would seem that the tremor mentioned took place a little early and shook Chris Dodd out of the race. The event stabilizes Connecticut, for now, but it does confirm that the tectonic plates of politics are shifting fast than anticipated and that Democrats are bracing themselves for a November quake that will have the Richter scale working overtime.