Connecticut Sen. Christopher Dodd, chairman of the Senate Banking Committee, is set to announce he will not seek re-election this fall, Fox News confirmed early Wednesday.
The five-term Democrat's decision is the latest in a string of big-name Democratic retirements revealed on Tuesday as the party struggles to contend with a challenging political climate.
Word of his retirement came hours after North Dakota Democrat Byron Dorgan announced he will not seek re-election, stunning many in his party.
The departure of Dodd, first elected to the Senate in 1980, carries the most symbolic value because of his seniority and his close association with the financial system bailout and other economic policies.
Dodd, 66, is chairman of Senate Banking Committee, which was at the center of efforts to deal with the economic meltdown. And he has played a prominent role in the debate over overhauling health care, taking over for his friend Ted Kennedy during his illness and then after his death.
Given Dodd's bad poll standing, other Democrats have gone out of their way to give him the spotlight in hopes he could recover before November.
With the embattled Dodd stepping aside, Democrats can now try to recruit a more popular candidate to run in Democratic-leaning state, bolstering the prospects of thwarting a Republican victory.
Dodd, who has taken heat for a discounted VIP mortgage loan he got from a subprime lender, has been consistently behind potential GOP challenger Rob Simmons in Connecticut polls. Simmons, a former House member, has his own challenger in World Wrestling Entertainment co-founder Linda McMahon, who is also seeking the Republican nomination for Dodd's seat.
Among the early favorites to replace Dodd is longtime Connecticut state Attorney General Richard Blumenthal, who is seen as one of the state's most popular politicians.
Dodd ran for the Democratic presidential nomination in 2008, moving his family to Iowa for weeks before the caucuses and angering Connecticut constituents. He dropped out after a poor showing in Iowa.
As chairman of the Senate banking panel, Dodd has come under fire for his reliance on Wall Street contributions. He drew criticism for his role in writing a bill that protected bonuses for executives at bailed-out insurer American International Group Inc., and for allegations he got favorable treatment on two mortgages with Countrywide Financial Corp.
The Senate ethics panel cleared Dodd of breaking rules by getting the Countrywide mortgages, but scolded him for not doing more to avoid the appearance of sweetheart deals. The Countrywide controversy, however, dogged Dodd for several months.
Dodd in August underwent surgery for prostate cancer. He also lost his closest friend in the Senate, Sen. Edward Kennedy, D-Mass., who died last summer after a battle with brain cancer.
Connecticut is a Democratic state that President Barack Obama won handily in 2008.
The Wall Street Journal and Associated Press contributed to this report.