updated 9/8/2009 9:33:54 PM ET 2009-09-09T01:33:54

Sen. Christopher Dodd has decided against succeeding his friend Edward Kennedy as chairman of the Senate panel focused overhauling the nation's health care system, a Senate aide confirmed Tuesday.

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Dodd's decision means that he will continue to lead the Senate's banking committee and focus his efforts on pushing through a major overhaul of federal banking regulations.

The job of chairman of the Health, Education, Labor and Pensions Committee was expected to fall to Sen. Tom Harkin of Iowa, the next most senior Democrat on the panel.

Whether Dodd would succeed Kennedy, who died last month of brain cancer, was the subject of much speculation on Capitol Hill in part because the move would have left the financial reform effort in the hands of Sen. Tim Johnson.

Johnson, whose home state of South Dakota has attracted the credit card industry because of its business-friendly usury laws, is seen as considerably more moderate than Dodd. He also is still recovering from a brain hemorrhage, prompting some lobbyists and aides to question whether he was up to the physical demands of being chairman.

As chairman of the Senate Banking, Housing and Urban Affairs Committee, Dodd, D-Conn., has been drafting a complex rewrite of the rules that govern banks and other financial institutions. He wants to create a new agency focused entirely on consumer protections, as President Barack Obama has suggested.

But Dodd has questioned other parts of Obama's plan; namely, whether to give new powers to the Federal Reserve to monitor large, influential organizations deemed too big to fail. Instead, Dodd has considered creating a council of regulators to do the job.

A spokeswoman for Dodd did not immediately respond for comment. Dodd's decision was first reported late Tuesday by The Washington Post.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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