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

By John Poirier - Analysis

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.