Even as Senate Banking Committee Chairman Chris Dodd announced his plan to retire, speculation began over how his probable successor, Sen. Tim Johnson, would handle the tricky issues the panel is likely to face next year.
Though the fight over regulatory reform will probably be complete, other problems — including the future of Fannie Mae and Freddie Mac — are expected to be left to the South Dakota Democrat.
"If Congress is going to establish a new future for the GSEs, it's going to have to happen next year," said Jaret Seiberg, a political analyst at Concept Capital. "The Senate Banking Committee is going to be in the middle of that debate."
A Johnson chairmanship would be likely to benefit the financial services industry, which regards him as a moderate, pro-business Democrat amenable to its concerns. Consumer groups are already on alert.
"We're concerned that the next in line — Sen. Johnson — may not have the same commitment to making sure that underserved people have greater access to private-sector products and services," said John Taylor, the president of National Community Reinvestment Coalition.
Some industry representatives said that Johnson's prospective role would lead him to take a more active one in the current debate over regulatory reform.
Behind the scenes, Johnson has already been negotiating with Dodd's staff on a way to ensure that national banks preserve their ability to preempt state consumer protection laws and do not have to face enforcement by local officials.
Dodd's original reform bill would have allowed states to write and enforce their own standards against national and state banks.
"He will play a stronger role in the dynamics of this bill," said Edward Yingling, the president and chief executive of the American Bankers Association. "Of course he will be very respectful to Chairman Dodd still being the chairman, but obviously people will be looking to him to be a more significant player in this process."
Johnson's ascent is likely to particularly help community banks. The South Dakotan has long championed their interests, including pushing for increases in the deposit insurance limit and stopping Wal-Mart Stores from buying an industrial loan company in Utah.
With deposit insurance coverage set to return to its previous $100,000 limit in 2014, Johnson is almost certain to work to make permanent the current $250,000 cap. (Congress raised the limit temporarily during the financial crisis to help ensure banks' stability).
"Sen. Johnson has been very good on community banking issues, so from the ICBA standpoint, he is one we would welcome," said Cam Fine, the president of the Independent Community Bankers of America.
Several analysts and industry representatives described Johnson as a "pragmatist," who is nonideological on many issues. He stands in contrast to Dodd and the panel's No. 3 Democrat, Sen. Jack Reed of Rhode Island, who are both regarded as liberals.
"He is more pragmatic," said Richard Hunt, the president and chief executive of the Consumer Bankers Association. "He obviously is more in the middle than Chairman Dodd."
Johnson's biggest challenge is liable to be the future of Fannie and Freddie.
Though the Obama administration is expected to outline its plan for the GSEs when it releases its budget next month, Democrats are reluctant to tackle the issue while the housing market remains unstable.
Democrats have at least four choices for the GSEs' future: nationalization, privatization, returning them to their pre-2008 status or turning them into public utilities.
During his tenure on the banking panel, Johnson has said little about the GSEs.
"He's very moderate … , but what his stance is on Fannie and Freddie, I don't know," said Paul Miller, an analyst at Friedman, Billings, Ramsey & Co.
As chairman, Johnson also would oversee any reform law's implementation and inherit any leftover business from the housing crisis.
The Financial Crisis Inquiry Commission is to make recommendations to Congress in December for preventing a repeat of the housing crisis.
Some talk remained on Wednesday about whether Johnson would get the job or perhaps step aside to give it to Reed. But several sources said Johnson wants to be the panel's chairman and has received assurances from Senate leaders.
"Now that Chairman Dodd has made his future plans known, Sen. Johnson is ready to assume the role," a spokeswoman for him said Wednesday. "He is more than up to the task and has the confidence of the majority leader and his colleagues on the committee."
Johnson's speech has been impaired since a December 2006 brain hemorrhage, but he remains mentally fit. The financial services industry is the top employer in his home state, and he ran for reelection in 2008 in part based on his seniority on the banking committee.