Dodd Defends His Bill

To set the tone, Dodd first told the audience about his memories of September 18, 2008.  He said Federal Reserve Chairman Ben Bernanke and former Treasury Secretary Henry Paulson called members of the Senate Banking Committee into their offices to tell them it would be a matter of days until the financial industry fell apart.  So during the next few days, the Senate created the Troubled Asset Relief Program (TARP) and Dodd believes if they hadn’t acted fast, things would look much different today.

Dodd then discussed the ever-present need for financial reform and Washington’s disinclination to take action unless there is a crisis. He said that the past few years have “energized Congress,” and the economic downturn gave its members the willpower to act.   

Regarding the Dodd-Frank Wall Street Reform and Consumer Protection Act, Dodd wanted to emphasize three things about the Act:

• It “was never intended to be punitive whatsoever.” It was simply a matter of creating a new architecture for finance appropriate for the 21^st century.    
• Its authors wanted to ensure that the U.S. continues to be the global economic leader and maintain its status within the G20.
• It was intended to restore confidence and optimism in the system.     

One complaint Dodd said he hears the often about the bill is that it left too much for the regulators to figure out.  “I plead guilty to that but I don’t think it was a mistake.  Leaving these things to Congress would have been a mistake,” he said; Congress left the “nuisances to the regulatory people.”

Dodd said that this “is not a perfect bill; it was not written in marble or granite.”But, he said, it was written with several goals in mind:

• Updating regulations for the 21^st century
• Not “strangling the market” in a rush to regulate
• Being a role model on the global economic stage
• Having consumer protection and economic growth be on equal footing

Dodd said that “all Congress did is establish a framework, the rest is up to the regulators and the people in this room.”He emphasized that long-term viability needs to be valued, “not just this quarter’s earnings.” He concluded that the government’s duty is to set parameters and be watchdogs; it’s the industry’s job to work within the parameters and he said he believes the industry will cooperate.