Obama win would have banks eyeing U.S. Senate posts

WASHINGTON (Reuters) - A reshuffling of Senate committee chairmanships if Barack Obama wins the U.S. presidency could help blunt new credit card rules but might hurt banks by helping reopen a bankruptcy law that made it harder for consumers to discharge their debt obligations.

Obama tapped Democratic Sen. Joe Biden of Delaware, who chairs the prestigious Senate Foreign Relations Committee, as his vice presidential running mate.

An Obama win could see Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, jump to heading the foreign relations panel, assuming Democrats retain control of the Senate, as expected.

"That would probably be his (Dodd's) first choice," said a banking industry executive who requested anonymity.

If Dodd made the switch, the next senator in line to head the banking panel -- which oversees banks, insurance firms and Wall Street -- would be Sen. Tim Johnson of South Dakota.

Like Delaware, South Dakota is home to credit card operations of several big financial institutions including Citigroup Inc (C.N).

Johnson, well versed in financial matters, suffered a brain hemorrhage in 2006 but spokeswoman Julianne Fisher said: "Senator Johnson is more than capable of doing any job that is given to him here in the Senate."

If Johnson took over the banking panel, credit card issuers such as Bank of America Corp (BAC.N) and JPMorgan Chase & Co (JPM.N) might still face the threat of legislation to crack down on unexpected credit card fees and interest rate increases.

CREDIT CARD BILL OF RIGHTS

Obama has said he wants to establish a credit card bill of rights to protect consumers from unfair practices, and supports capping interest rates on consumer loans at 36 percent, something the banking industry opposes.

But such legislation might have a tougher time in the banking committee under Johnson, said Jaret Seiberg, a policy analyst with investment firm Stanford Group Co.

"We would expect Johnson to be less inclined to move comprehensive credit card legislation than Dodd," he said.

Kate Szostak, Senate Banking Committee spokeswoman, said Dodd is currently focused on the banking committee's agenda for this year and next, including overseeing the implementation of the housing bill that passed in July.

Next on the Senate Banking Committee succession chart after Johnson is Rhode Island Democrat Jack Reed, now chairman of the securities, insurance and investment subcommittee. A former Army Ranger and son of a World War II veteran, Reed has been talked about as a possible secretary of defense under Obama.

An Obama win would also mean that Biden's spot on the Senate Judiciary Committee, which has jurisdiction over U.S. bankruptcy law, would open up.

Biden backed 2005 legislation that made it more difficult for consumers to be released from debt in bankruptcy.

Without Biden, other Democrats could try to roll back some of the provisions, making it easier for bankrupts to discharge debt from credit cards, mortgages and student loans, say lawmakers' aides and industry lobbyists.

But bank industry lobbyists warn against too much speculation over committee reshuffles, saying little change is expected if Republican Sen. John McCain and running mate, Alaska Gov. Sarah Palin, win the November 4 election.

TOP CONTRIBUTORS

Over the last two decades, individuals employed by commercial banks and other financial companies, plus associated political action committees (PACs), gave Johnson more than $839,000 and Biden almost $573,000 in campaign contributions, according to the Center for Responsive Politics.

From 2003, donations from individuals and PACs associated with JPMorgan Chase and Capital One Financial Corp (COF.N) were among Johnson's top five contributors, the campaign finance watchdog said.

Johnson, who is seeking reelection in November, got $32,850 from donors associated with JPMorgan and $26,000 from Capital One in the last six years.

The Center for Responsive Politics said Biden's largest campaign contributors have been donors and political action committees linked to credit card company MBNA Corp, which was acquired by Bank of America in 2006.

(Editing by Tim Dobbyn)