Tim Johnson — Senate Banking, Housing, and Urban Affairs Committee

Introduction

As federal regulators begin to implement financial regulatory reform, Tim Johnson of South Dakota replaces retiring Sen. Chris Dodd in the high-profile chairmanship of the Senate Banking, Housing, and Urban Affairs Committee.

After 10 years as the state’s lone member of the House of Representatives, Johnson narrowly defeated Republican incumbent Sen. Larry Pressler in 1996 and was re-elected to the upper chamber six years later by an even narrower margin — just 524 votes — against then-Rep. John Thune.

In December 2006, Johnson suffered a brain hemorrhage, causing him to miss nearly a year of work and leaving him with partial paralysis. Following this near-death experience, he returned to Washington to chair the Banking, Housing, and Urban Affairs subcommittee on financial institutions and was easily re-elected by the South Dakota electorate in 2008.

Johnson, 64, a relatively moderate Democrat, will lead a body that oversees banking, insurance, financial markets, securities, housing, urban development and mass transit, international trade and finance, and economic policy. In the 111th Congress, this committee was heavily involved in passage of landmark reform legislation named partly for Johnson’s predecessor: the Dodd-Frank Wall Street Reform and Consumer Protection Act, which massively altered government regulation of the financial services sector. The banking panel was also crucial to passage of the Credit Card Accountability Responsibility and Disclosure Act of 2009, which expanded regulation of the credit card industry. Johnson backed Dodd-Frank but was one of just five senators (and the lone Democrat) to oppose the credit card measure. Citibank’s credit card operation is based in South Dakota and the state has long attracted that sector with its industry-friendly laws.

Johnson’s top PAC contributors, unsurprisingly, include a heavy dose of financial sector interests. While his personal ethics have been largely unquestioned by government watchdogs — he even served as the top Democrat on the Senate’s Select Committee on Ethics — some critics have noted that he was the leading recipient in the 2008 cycle of contributions from the controversial payday lending industry, which was overseen by his subcommittee. Several former Johnson aides are now registered lobbyists representing the sectors his new panel will regulate.

Another former aide turned lobbyist, Dwight Fettig, had worked for more than a year as a partner at what was then Porterfield, Lowenthal & Fettig, LLC, lobbying for Prudential Financial, Vanguard, Massachusetts Mutual Life Insurance, the American Bankers Association, and JPMorgan Chase. On Dec. 3, the firm announced that Fettig was returning to Sen. Johnson’s team and said in a press release that Fettig would afford his former employer “no special treatment due to a prior business relationship.” Fettig will reportedly become staff director to Johnson’s Banking, Housing, and Urban Affairs committee.

The South Dakotan has said that he will have two major priorities as chairman of the committee: overseeing the implementation of Dodd-Frank and determining the future of Fannie Mae and Freddie Mac, the troubled government-sponsored housing finance giants.

A spokeswoman for Johnson told the Center that campaign contributions “do not influence the senator’s votes,” and noted that “he has voted against positions the banking industry has [supported], like TARP, and voted in support of others.” Johnson was one of 25 senators to oppose the 2008 Trouble Asset Relief Program. Johnson is “always proud of his former staff when they leave his office and take a new direction,” she said, noting that the senator believes transparent earmarks give “communities much-needed investments that work for our state.”

Top PAC Contributors

• American Bankers Association, trade association for the nation’s banking industry — at least $28,000
• American Council of Life Insurers, trade association for the life insurance and annuity industry — at least $27,500
• JPMorgan Chase & Co., a global financial services firm with assets of $2 trillion — at least $17,500
• Deloitte LLP, an audit, financial advisory, tax, and consulting company — at least $17,500
• Wells Fargo & Co., a financial services giant — at least $17,000
• Massachusetts Mutual Life Insurance Co., an insurance, investment, and retirement product firm — at least $17,000
• PACs gave at least $2.3 million to Johnson’s campaign account and his South Dakota First leadership PAC

Revolving Door

• Mara Baer, who was senior health policy adviser to Johnson from 2003 to 2006, is director of federal relations at the Blue Cross Blue Shield Association
• Greg Billings, a former deputy chief of staff to Johnson, is senior government relations director for Drinker Biddle, lobbying for Virtual Radiologic, Mercy Hospital Medical Center in Des Moines, Iowa, and the National Association for Home Care & Hospice
• Naomi Gendler Camper, a banking and tax aide to Johnson from 2001 to 2005, is co-head of federal government relations at JPMorgan Chase
• Adam Charles Healy, a legislative assistant and research associate to Johnson, is senior government affairs representative at the National Telecommunications Cooperative Association
• Mark Rubin, legislative director and counsel to then-Rep. Johnson, is director of federal legislative affairs for Verizon
• Katy Ziegler Thomas, a research assistant to Johnson from 2002 to 2003, is chief of staff at Growth Energy, a pro-ethanol lobbying group
• Matt Thornblad, who was a legislative assistant to Johnson from 2001 to 2010, is director of energy and environmental government affairs for United Technologies Corporation

Earmarks

• Between 2008 and 2010, Johnson obtained just under $481 million in earmarks, according to Taxpayers for Common Sense
• In 2010, he obtained just over $103 million in what Taxpayers for Common Sense considered earmarks, including $2 million for Northrop Grumman for LITENING 4th Generation Kit Upgrades, $1.6 million for General Atomics for a Military Waste-to-Energy Project using the Hydro-Thermal Energy Conversion (Hy-TEC) Process, and $2 million for Boeing for B-1 AESA Radar Operational Utility Evaluation. He also shepherded a $32.2 million earmark in 2010 for Mni Wiconi, a rural water supply project providing water to southwestern South Dakota

Campaign Promises

• The Argus Leader of Sioux Falls, South Dakota, reported that Johnson said his two priorities as chairman would be overseeing implementation of the financial reform law and dealing with Freddie Mac and Fannie Mae. He said he would be open to “minor changes” in the Dodd-Frank law but was more interested in making sure its provisions are fair to all banks, especially community banks
• The Wall Street Journal reported Johnson also said he would proceed cautiously on reforming Freddie Mac and Fannie Mae, saying “I do not want to further destabilize housing markets or make homeownership unaffordable for the majority of Americans.” He also said “a 30-year fixed-rate mortgage option is one thing that needs to be preserved as far as I’m concerned”
• A Johnson spokeswoman told the Center that “oversight will be necessary, and of course there will be issues that need to be revisited, but the senator does not foresee wide-scale repeal or major changes” to the Dodd-Frank law. “Implementation of the Dodd-Frank Wall Street Reform and beginning mortgage market reform will not be the only items on the Banking Committee’s calendar, but they are major items that will need attention and time.” She noted that South Dakota is “a state with a large presence of small, community banks, and he certainly does take into account the impacts of new legislation on small banks in addition to large banks. He also considers the impact on rural areas where credit is often less available and how legislative action will impact the price of consumer products. He believes good policy includes balancing consumer protection and business development to strike the right balance”