As the debate over financial reform heats up, some new questions are being raised over potential conflicts of interest surrounding Senate Banking Committee Chairman Chris Dodd, D-Conn. -- specifically whether his wife's ties to a major futures exchange, the CME Group, might undermine the reform process. The CME is seen as benefiting from new derivatives rules.
"Jackie Clegg Dodd is a major decision-maker at the CME," said Dave Levinthal, communications director for the Center for Responsive Politics in Washington, D.C. "And the CME stands to greatly benefit from the Dodd legislation. Given that, whether there is an actual conflict is beside the point – the mere perception is enough to warrant further scrutiny."
A veteran financial policy expert going back to her days as deputy head of the Export-Import Bank of the United States, Clegg-Dodd currently sits on the CME's board of directors and owns shares in the company. Her derivatives world directorship spans back nearly a decade to when she joined the board of the Chicago Board of Trade prior to that exchange merging with the CME in 2007.
Clegg-Dodd declined to comment. A CME spokesman e-mailed a written statement: "The CME Group has in place a conflict of interest policy that applies to its board members ... our board follows the policy, and conflicts of interests are raised, discussed and directors recuse themselves from the vote as appropriate."
A senior CME source, speaking on condition of anonymity, insisted Clegg-Dodd has deliberately recused herself from all matters relating to credit default swaps. The CME spokesman could not comment on whether that has been the case.
Meanwhile, Democrats on the Senate Banking Committee Monday passed a financial regulatory reform bill on to the full Senate where it will likely be taken on next month. A House version has already passed.
The possible conflict of interest, raised over the weekend by a Los Angeles Times columnist citing an earlier Reuters article, has no bearing on Dodd's efforts to reform derivatives markets, said Dodd's spokeswoman, Kirstin Brost.
"[Jackie's] work on the CME board does not affect Chairman Dodd's work on the committee and vice versa," Brost said. "She does not lobby Congress and has employed an ethics attorney since entering the private sector who reviews all her boards to protect against conflicts of interest."
"Clearly it looks bad, even if there isn't anything going on," said Mark Calabria, director of financial regulation studies at the Cato Institute. Calabria was a staffer on the Senate Banking Committee when it was chaired by Sen. Richard Shelby, R-Ala. "There are a lot of rules and restrictions pertaining to money and politicians. But when it comes to political wives, well, that's a different story. I was shocked at some of what I saw on the Hill, frankly."
Scrutiny of congressional spouses rose to new levels in 2001 after Enron melted down, when it turned out that Wendy Gramm, wife of then-Senate Banking Committee Chairman Phil Gramm, was on the Enron board. Gramm had helped write legislation that allowed Enron's aggressive expansion into energy trading markets without regulatory oversight.
Last year, Clegg-Dodd's role as a director of a Bermuda-based company controlled by AIG sparked some controversy for her husband.