Sen. Chris Dodd Announces Retirement From Senate, Will Finish Term

Chris Dodd Won't Seek Re-election

When Dodd steps down at the end of his current term, it will represent the departure of one of the most powerful lawmakers on Capitol Hill -- if not the most powerful -- on financial issues.

The Connecticut senator is the chairman of the Senate Banking Committee, a panel currently holding the key to financial regulatory reform efforts. While the House has already passed its version of the bill, the Senate has yet to move its measure out of the banking committee.

Dodd's departure will have strong implications for the ongoing push to overhaul the financial system in the wake of the worst crisis since the Great Depression, but what impact remains to be seen.

A key facet of Dodd's proposed financial reform bill is a drastic reduction in the power of the Federal Reserve. The central bank has been blamed by some critics for not doing a good enough job protecting consumers from the financial industry.

A source in the financial industry told ABC News Wednesday that Dodd's departure will be viewed as a positive by the industry, which has opposed a number of measures he has proposed.

"It's a good thing because politics were driving a lot of his decisions, rather than economics," the source said. "Without the politics, he's left to economics and hopefully the bipartisan bill will be easier to achieve because the focus will be not on what's best for the re-election of a senator, but rather modernizing the regulatory system.

"If he were running for re-election, he'd be more likely to be more populist. Now that he's not, he doesn't have to be that populist as it relates to regulatory reform. His populist trend will not continue," the source added. "The political pressures associated with re-election are off the table, it's out, he's beholden to no one."

The White House today was hesitant to weigh in on what Dodd's departure would mean for the fate for financial regulatory legislation in the Senate.

"Knowing Sen. Dodd and the passionate advocate that he is, I think he will continue to work hard and want to get this done by the end of this year, as the president does, too," White House press secretary Robert Gibbs told reporters today.

Dodd was involved in one of the biggest scandals in the recent financial crisis. He was one of several lawmakers cited as participating in the "Friends of Angelo" scheme, which involved members of Congress and other federal officials allegedly receiving sweetheart loan deals from former Countrywide Chief Executive Angelo Mozilo. Last year Mozilo became the highest-profile executive to date to face charges when the Securities & Exchange Commission in June accused him of insider trading.

The subprime lender was taken over by Bank of America last year amid growing losses in Countrywide's loan portfolio. Bank of America received a $45 billion bailout by the U.S. Treasury.

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