SCENARIOS: Changes loom at Senate health, bank committees

(Reuters) - The death of Senator Edward Kennedy will trigger a power shuffle among fellow Senate Democrats as they push President Barack Obama's goals of overhauling U.S. healthcare and regulating the troubled financial industry.

Senators Chris Dodd and Tim Johnson are in line for key committee chairmanships when the Senate reconvenes next week after a monthlong recess, although other options are open.

Here is a look at some of the changes that may be made.

HEALTH COMMITTEE

* Dodd, a longtime Kennedy friend, must make a decision. Does he remain chairman of the Committee on Banking, Housing and Urban Affairs or take over what was Kennedy's Health, Education, Labor and Pensions Committee? As the Democrat with the most seniority on the health committee, it is essentially Dodd's call.

In trouble in his bid to win a sixth term as senator from Connecticut in next year's election, it may make sense politically for Dodd to switch chairmanships.

Consider this: At least some analysts figure there is a better chance to win scaled-backed healthcare reform than any regulatory reform this year -- and Dodd, as chairman of the health committee, could lead the charge, routinely invoking the Kennedy name on the campaign trial. Kennedy was a longtime champion of healthcare reform and a towering figure in the Democratic Party and U.S. Senate.

"Dodd would be at the center of the negotiations and this would give him the ability to shine and show leadership in the dealmaking and perhaps get credit for helping to navigate the Dems' liberal/centrist divide," said Ethan Siegal of The Washington Exchange, a private firm that tracks Congress for institutional investors.

Senate Majority Leader Harry Reid, a Nevada Democrat, said in an interview last week with a newspaper in his home state, the Reno Gazette-Journal, that he expected Dodd to take over on the health committee.

"We're going to have a new chairman of that committee. It'll be, I don't know for sure, but I think Senator Dodd," Reid said. "He has a right to take it." Reid noted that if Dodd did not want it, Senator Tom Harkin, another Democratic liberal, would be next in line.

Kennedy, who died last week of brain cancer at the age of 77, had handpicked Dodd and Harkin to help draft legislation on healthcare reform, which he called "the cause of my life."

BANKING COMMITTEE

* If Dodd takes the chairmanship of the health committee, the next senator in line to head the banking panel would be Johnson of South Dakota. Johnson suffered a brain hemorrhage in 2006 that requires him to use a wheelchair and hampered his ability to speak. Yet he remains mentally sharp and seems ready to take the chairmanship if it becomes open.

In fact, during Johnson's 2008 Senate campaign, Reid sought to end speculation that he might be passed over for chairman of the banking committee, which is helping lead the drive to overhaul regulation of the financial industry.

Reid's press secretary, Jim Manley, said at the time that if Dodd stepped aside, Johnson would get the post. "There's no one who could do a better job," Manley said.

"The business community would be happy to see Johnson as chair because Dodd was so tough on them," a congressional analyst said on Tuesday.

Asked not to be identified by name because of the sensitivity of the matter, the analyst said, "Johnson is viewed as a more moderate senator, who, unlike Dodd, isn't seen as hostile to banking interests."

Dodd was a lead negotiator in drafting legislation last year to bail out troubled U.S. industries. Johnson opposed the effort until additional safeguards were added to protect U.S. taxpayers.

Johnson's home state of South Dakota is home to credit card operations of several big financial institutions, including Citigroup Inc.

At a hearing last month by the banking committee, Johnson preached the need for action and bipartisanship in the sharply divided U.S. Congress.

ANOTHER OPTION

* If Johnson were to decide not to take the chairmanship, the position would go to Senator Jack Reed, a liberal. Another possible scenario, congressional and financial analysts say, is for Johnson to be named chairman, with Reed handling many of the daily chores.

Reed now chairs a subcommittee on securities, insurance and investment and has introduced bills to crack down on credit rating agencies and hedge funds.

Reed, given his liberal record, would likely be tougher on business than Johnson. With Johnson in charge, expect a slower push for reform than there might be under Dodd or Reed.

To be sure, if Dodd gives up the banking committee, there would be likely be significant delays in financial reform while a successor takes over, analysts say.

But Dodd could surprise and stay on as banking committee chairman. He said last week he was not ready to make a decision on the chairmanship. "Let me give it some thought and talk to some people. I really don't have an answer for you at this point," Dodd said.

(Writing by Thomas Ferraro; Reporting by Thomas Ferraro, Rachelle Younglai and Richard Cowan; Editing by Peter Cooney)