Dodd's AIG Ties, Cash Shortage Threaten Senate Re-Election Bid
By Kristin Jensen and Jonathan D. Salant
April 1, 2009
April 1 (Bloomberg) -- Senate Banking Committee Chairman Christopher Dodd finds himself in an unlikely spot after three decades representing Connecticut: short on cash and bracing for a tough fight to keep his seat next year.
The Democrat has less than half the campaign cash he had at a comparable point in his last re-election bid, when he faced far fewer hurdles. Last year, he emptied an account built up largely through financial-company employees' donations to pay for a presidential run; now, he has to replenish his coffers even as the firms his panel regulates struggle with losses and back away from their one-time champion turned critic.
Meanwhile, Dodd, 64, is drawing voters' ire for inserting a provision into the economic-stimulus plan that had the effect of authorizing American International Group Inc. to pay bonuses to its employees.
"He has a triple-witching hour," said former Federal Election Commission Chairman Trevor Potter, a Republican. "The industry itself is in trouble. They're going to be reluctant to give to him because of some of the positions he has taken, and he is going to be reluctant to be funded by them."
Financial services account for more than 8 percent of his state's jobs; Connecticut-based firms hold about a third of the global hedge-fund assets under management, according to the Connecticut Hedge Fund Association.
Dodd began the year with $670,654 on hand; by contrast, he had about $1.6 million at the same point in his last Senate race. He ended up spending $5.7 million for his 2004 election after raising a total of $7.1 million, according to the Washington-based Center for Responsive Politics.
In 2007, Dodd transferred to his presidential campaign $4.7 million that had been raised for his 2010 Senate campaign. Now, many of his donors are already close to the maximum contribution limits per six-year election cycle, while Dodd is tied with Republican challenger and former Representative Rob Simmons, 66, according to a poll released on March 10 by Quinnipiac University in Hamden, Connecticut.
Dodd's re-election bid may hold back Democrats in their quest to expand their Senate majority. The party now controls 58 seats with one election in Minnesota still in contention. A fight for Dodd's seat next year clouds an otherwise bright early picture for Democrats next year: The party only has to defend 17 Senate slots, compared with 20 for the Republicans, and four Republican senators have announced their retirement.
Fundraising No Issue
Dodd adviser Jim Jordan, a former executive director of the Democratic Senatorial Campaign Committee, said money isn't an issue for his candidate.
"Our fundraising is strong in the first quarter," Jordan said. "We're on exactly the arc we need to be to raise what we need to win." First-quarter reports are due April 15.
Still, as Banking Committee chairman, Dodd is overseeing company bailouts that are proving unpopular with voters, including the addition of the AIG provision in the $787 billion stimulus legislation.
Initially, Dodd sponsored a provision to limit bonus payments. During House and Senate negotiations, he said he agreed to make what he said were "relatively technical" changes when asked to do so by the Obama administration. Dodd said he didn't realize the changes would benefit AIG. He then called for repealing the provision authorizing the bonuses.
Amid a public firestorm, President Barack Obama, 47, and lawmakers took turns criticizing AIG for awarding the bonuses, and the House on March 19 voted to impose a 90 percent tax on the compensation. Yesterday, Dodd's committee approved new restrictions on credit-card interest rates over the objections of banks.
In moving against the financial industry, Dodd is taking on his biggest source of donations. Between 1989 and 2008, three of his top four donors were financial companies: Citigroup Inc., Bear Stearns Cos. and AIG, according to the Center for Responsive Politics research group.
All three of the New York-based companies have had to turn to the government for help; JPMorgan Chase & Co. bought Bear Stearns in June. Dodd will feel the effects of the financial crisis, said Toby Moffett, a former Democratic congressman from Connecticut.
"If I was his finance chairman, I wouldn't put the banks and financial institutions-related piece of that fundraising goal at a big number," said Moffett, 64.
Move to Iowa
Dodd's troubles extend to other issues, said Douglas Schwartz, the poll director at Quinnipiac. Schwartz said Dodd's approval ratings dropped three times in the last two years: after he decided to run for president, after he moved his family to the early voting state of Iowa, and after reports he got a mortgage through Countrywide Financial Corp.'s "V.I.P" program.
"He has to be worried," Schwartz said. "Connecticut is a blue state, so Dodd should be way ahead."
In his last two re-election bids, in 1998 and 2004, Dodd won with more than 65 percent of the vote. The March 3-8 Quinnipiac survey of 1,238 registered Connecticut voters found Dodd polling at 42 percent, compared with 43 percent for Simmons. The nonpartisan Cook Political Report rates the race a "tossup."
The campaign has drawn the attention of the National Republican Senatorial Committee, which helps find and fund Senate candidates. NRSC spokesman Brian Walsh said Dodd has dug a "tremendous hole" for himself.
"Anytime you see a 30-year incumbent trailing a lesser- known competitor this far out from the election, those numbers are a referendum on the incumbent," Walsh said.
Joseph Lieberman, Dodd's fellow Connecticut senator, disagreed, and said the turbulence would blow over before Election Day.
"There's been a cloud over Chris's head," said Lieberman, a onetime Democrat who won re-election as an independent in 2006 after losing a primary challenge. Yet "people are going to vote not on a few months but on a record since 1980."
Click here to return to FBIC homepage