At the Salt conference in Vegas, former Senator Dodd make it clear that he was not a fan of his own bill, Dodd-Frank. He joked,”I did not want the bill named after me. My children are going to have to change their name.”
He tried to downplay his own role as chairman of the Senate Finance committee. “Congress not a meritocracy. I became chairman because I outlived everyone else,” explained Dodd, who now heads the Motion Picture Association.
Dodd acknowledged the problems with the “too big to fail” provisions. He conceded, “I know that the too big to fail provisions in Dodd Frank are controversial. They are not meant to prevent another bank from being too big to fail. They are to prevent them from metastasizing so that they we can avoid another Lehman style bankruptcy.”
Dodd halfheartedly tried to justify the bill. He said,”It was our best effort. The markets needed certainty. At first, people complained that the provisions were going to take too long to take effect. Now they are saying we are moving too quickly.”
“We didn’t want to strangle innovation and needed to balance it with good regulation and offer harmonization of rules.” When we were working on the bill, we were faced with time constraints and high emotion,” continued Dodd.
Dodd, a Democrat, laid off some of the blame on the Bush White House. He said, “During the financial crisis, I could not the attention of the Bush adminstration until October.”
He also faulted the furor over executive pay and the new consumer bureau for preventing a discussion about other provisions in the bill. He recalled,”I met with the National Business Roundtable. I took staffers from the banking committee. I thought that we were going to talk about derivatives. Instead the whole hour and half discussion focused only on the consumer bureau and execuitve pay.”
Dodd painted a picture of how dire things were during the crisis. “People need to remember that on the Sunday night of Bear Stearns, we were 10 minutes away from declaring a bank holiday on Monday,” pleaded Dodd. “Two weeks later, all the leaders of Congress gathered in Speaker Pelosi’s office. Ben Bernanke then told us,’If you do not act in days, the fiscal system is days will suffer from a complete meltdown. We authorised $700 million on the basis of a 2 1/2 page bill. There was no limitations on how they spent the money.”
Dodd was disappointed that Republicans, who crossed the aisle and worked with Democrats to pass the bill, did not win re-election. “It is upsetting to me that Bennett and others were defeated because of their vote for the bill. They were good men,” said Dodd.
For the time being, Dodd thinks we are stuck with the current bill. “The bill that attempts to repeal Dodd Frank will not pass,” said Dodd. “If it does, it will be vetoed by the president. Let’s be constructive and stop the political posturing that would wipe out the bill.”
In closing, Dodd gave a hearty defence of Obama. He argued,”Obama faced the worse economic problems since Roosevelt.”
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