POSITION: Ranking member, Senate Banking Committee; potential incoming Chairman
LOCATION: Washington, D.C.
EDUCATION: B.A., M.A., J.D., University of South Dakota.
While Congress has passed the baton to the SEC on Wall Street reform, much of that effort consists of a series of studies, with reports due to Congress over the next year and beyond. That means that legislators on Capitol Hill will have an impact on how SEC rulemaking plays out with respect to the fiduciary standard, regulatory harmonization and an SRO, among other things. With Senator Christopher Dodd (D, CT) set to retire in November, the Senate Banking Committee will have to appoint a new head. As long as the Democrats maintain a majority in the Senate, as many expect them to, Senator Tim Johnson (D, S.D.) is the most likely candidate, due to his seniority on the committee.
“Johnson and [Congressman Barney] Frank will continue to play an important role if they don't like the direction that the SEC is taking at the conclusion of that study,” says David Bellaire, director of government affairs at the Financial Services Institute. “I'm sure they'll use their power to make changes.”
Even if he doesn't take over for Dodd, Johnson will continue to wield his influence on the Senate Banking Committee. He already had a big hand in shaping reform, particularly where financial advisors are concerned. The original Senate legislation would have applied a fiduciary standard to brokers, flat out. Then Johnson and Senator Mike Crapo (R, ID) sponsored an amendment requiring that the SEC study the issue of regulatory harmonization and a fiduciary standard for brokers instead. But ultimately, Johnson agreed to a final compromise that requires a study and gives the SEC rulemaking authority to apply the fiduciary standard more broadly.
“If he doesn't like the way things have gone, or they haven't met expectations, the initial approach will be to do hearings on things to highlight things, raise issues,” says Dan Barry, managing director of government relations and public policy. “But ultimately, he conceded to giving the SEC regulatory authority. If it's not an overboard exercise of authority, he'd be hard pressed to come back and say let's undo this thing that I signed off on.”