Wednesday’s announcement that Senate Banking, Housing and Urban Affairs Committee Chairman Christopher Dodd (D-CT) will retire and not seek reelection in 2010 will surely have an impact on the large-scale financial regulatory overhaul effort he is currently shepherding through the Committee.

Almost immediately after news of Chairman Dodd’s decision broke, financial services insiders began speculating on the effect it would have on the fate of the reform legislation. The first thought is that the retirement will allow the Chairman to move forward on a bill without consideration of the political dynamics and realities that a reelection bid would have forced him to consider.

Second, in retiring from the Senate after three decades of service, Chairman Dodd will want to deliver on a major financial regulatory overhaul achievement as part of his legacy. Despite his recent political woes, he will want to end his 30 year Senate career on a high note.

Finally, many feel each of the above factors are likely to bode well for the emergence of a bipartisan agreement. As previously reported here, Chairman Dodd and Ranking Republican Richard Shelby (R-AL) recently reaffirmed their bipartisan intentions and hope to have an agreement cemented by the end of the month. The pair – who already have a history of working together on major pieces of legislation – will no longer have to contend with the politics surrounding Chairman Dodd’s tough reelection bid.