WASHINGTON — Wealthy Wall Street executives may be outcasts to some Americans, but not to Democratic Sen. Chris Dodd.
Facing his toughest re-election fight, the chairman of the Senate Banking Committee is reaching out to the financial sector's deep-pocketed donors for the campaign cash he needs to hang onto his Connecticut seat.
It's a practice that worked for Dodd in the past as millions flowed in and the five-term lawmaker cruised to victory. Down in the polls and looking at a tough Republican challenge next year, Dodd again is turning to the financial industry for campaign money, undeterred by the populist Main Street anger.
More than $100,000 of the $1 million Dodd raised in the first three months of this year came from political action committees for the financial, insurance and real estate industries, according to his latest fundraising report. Among his donors were PACs for the American Insurance Association, Mortgage Bankers Association, Vanguard, Oppenheimer Funds, Charles Schwab, Real Estate Roundtable and Ameriprise Financial.
Dodd raised $608,995 from individuals, among them top executives from companies such as Fidelity, Citigroup and Citizens Financial Group. His take from Connecticut residents was $4,250, an especially anemic display of political enthusiasm for the state's senior senator.
Dodd long has been a financial industry favorite, partly due to his powerful banking panel chairmanship and partly due to many of his constituents ties to Wall Street. Scores of hedge fund managers call Greenwich, Conn., home. The finance, insurance and real estate sectors have given Dodd $13.2 million from 1989 through 2008, according to the Center for Responsive Politics, a nonpartisan watchdog group.
In recent months, the twists and turns of American International Group Inc., have created major headaches for Dodd.
He was skewered in the public furor over $165 million in executive bonuses for the bailed-out insurance giant. After first denying it, Dodd acknowledged that he agreed to a request by Treasury Department officials to dilute a bonus restriction in the economic stimulus bill. His approval rating sank to a career-low 33 percent in a recent Quinnipiac University poll.
Critics pointed to Dodd as the top recipient of AIG-related contributions. He took $281,038 from employees, family members and the firm's fundraising arm since 1989, according to the Center.
The special interest cash leaves Dodd vulnerable to charges that he's too cozy with the very people he's supposed to regulate, the same crowd many blame for the financial meltdown. It's a problem lawmakers who rely on Wall Street campaign cash face as Congress tackles a sweeping financial regulation overhaul.
One of the country's wealthiest hedge fund managers, John Paulson, recently hosted a New York fundraiser for Dodd. The event came as the banking panel considers whether new regulations are needed for hedge funds, the vast pools of capital that largely escape government supervision.
"There's a sense that members of Congress are too close to these industries they're supposed to be regulating," said Bill Allison of the Sunlight Foundation, which promotes government openness. "And instead there's this co-dependency. I think that's what's troubling a lot of people."
Dodd's campaign account could swell as Congress tackles new regulations on financial institutions, including proposals to boost the tax rate paid by hedge fund managers like Paulson, Allison said.
"If you are a hedge fund operator, you may want to have something to say about that," Allison said. "The best place to say it with members of Congress is at their fundraisers."
Dodd's campaign manager Jay Howser said Dodd isn't swayed by the money.
"Campaign contributions do not, and never have, influenced Senator Dodd's priorities," Howser said. "Time and again he's led the fight to protect consumers against the financial industry."
Former Rep. Rob Simmons, one of Dodd's GOP challengers, has criticized Dodd's "sweetheart deals" with Wall Street types.
In January, Dodd held a fundraiser at the Investment Company Institute, a Washington-based mutual fund trade group. The group's president and CEO Paul Schott Stevens was an event host. Six weeks later, Stevens testified before Dodd's banking panel at a hearing on regulating the securities markets.
Institute spokesman Greg Ahern said the group has supported and worked with Dodd for many years. He said Stevens was invited to testify because the institute's white paper on regulatory reform came out a few weeks beforehand.
The Consumer Federation of America, a nonprofit advocacy group, praised Dodd's work curbing credit card lending abuses, but said Dodd's record on securities and investor protection issues isn't as impressive.
"If you look back over the years, it's a mixed record — but with a good record in times of crisis like right now," said Barbara Roper, the federation's director of investor protection.
Dodd also has faced questions about his initial refusal to release documents about his two controversial mortgages with Countrywide Financial Corp.
Dodd, who has nearly $1.4 million cash on hand, spent nearly $6 million for his 2004 re-election and will likely need considerably more for his 2010 race.