UPDATE 2-Dodd's committee choice a negative for banks-study

* Dodd says to remain Senate Banking Committee chairman

* Dodd says he hopes for financial reforms by end of 2009

* Harkin says Dodd to stay involved in healthcare debate
(Recasts with Dodd's announcement, adds comments by Dodd and
Harkin)

By Kevin Drawbaugh

WASHINGTON, Sept 9 (Reuters) - U.S. Senator Christopher
Dodd said on Wednesday, as expected, that he will remain
chairman of the Senate Banking Committee, a move that one
policy research study called a negative for banks.

Dodd said at a news conference that he had decided to stay
in his post -- and not take over the Senate Health, Education,
Labor and Pensions (HELP) Committee -- so that he can tackle
the job of financial regulation reform.

"I'm going to get that job done," he said. "We'll see these
reforms adopted, hopefully by the end of this year."

Dodd had been rumored to be the replacement for the late
Sen. Edward Kennedy, his close friend, as HELP chairman.

But Sen. Tom Harkin laid claim to that job on Wednesday.
Harkin's former post as chairman of the Senate Agriculture
Committee will be filled by Sen. Blanche Lincoln.

"Senator Dodd's decision to stay with Senate Banking is a
negative, in our view, for the banks and the financial services
sector," said Teddy Downey, policy analyst at Concept Capital,
an investment research firm in Washington.

The banking panel and Dodd have a key role to play in an
effort by the Obama administration and congressional Democrats
to tighten regulation of markets and banks, including major
institutions such as Goldman Sachs (GS.N), Citigroup (C.N),
JPMorgan Chase (JPM.N), Bank of America (BAC.N) and others.

"We believe Dodd is likely to become more populist in the
next 12 months as he nears reelection," Downey said.

"That bodes ill for the banks, which are under threat from
legislation that would limit overdraft fees, further regulate
mortgages and create a Consumer Financial Protection Agency
that could sharply curtail how banks interact with customers.

"In brief, the banking sector will continue dealing with a
Senate Banking chairman who needs to show voters that he is not
captive to the financial sector. That is never a positive
development," he said.

By staying at banking, Dodd could prevent additional delays
in an already bogged-down push for financial reform in response
to the 2008-2009 financial crisis, the worst in decades.

Harkin and Dodd have both been deeply involved in recent
weeks in the high-profile healthcare reform debate, assuming
the burdens of the health panel chairmanship as Kennedy
struggled against terminal brain cancer. He died last month.

Harkin said at the news conference in the Capitol that Dodd
would "continue to shepherd the healthcare bill, on behalf of
our committee, through the Senate."

Dodd underwent successful surgery for early-stage prostate
cancer in August and is recovering well. He faces a difficult
reelection campaign in 2010 at home in Connecticut.

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(Additional reporting by Charles Abbott and Thomas Ferraro,
editing by Matthew Lewis)