Senator Dodd Says Don't Do Dodd-Frank Act Corrections Bill Until Regulatory Implementation Completed

While supporting targeted changes to the Dodd-Frank Act, former  Senator Chris Dodd (D-CT) cautioned that the premature  opening up of Dodd-Frank  could cause more harm than good and open up a Pandora’s box since there are some who wish to weaken the legislation.  Senator Dodd recommended that any legislative changes to Dodd-Frank await the full regulatory implementation  of the Act by the SEC and other federal financial regulators. He added that federal agencies like the SEC still have many rules to adopt to fully implement the Act. Only after the entire law is implemented by regulations  will we  know what has to be done, he noted.  In addition, in remarks at the Bipartisan Policy Center,  Senator Dodd decried what he called the ``purposeful underfunding’’ of the SEC and CFTC  after Dodd-Frank gave them significant new duties. This agency underfunding  places the economy  at risk, he warned.

The Dodd-Frank Act is not biblical, he said, and there are good amendments being proposed.  For example, one change he supports is legislation to codify the exemption from margin requirements for non-financial derivatives end users.

The Senator reminded that the financial crisis that caused stunning carnage to the financial system  was caused by an outdated financial regulatory system.  The Dodd-Frank Act  created a financial regulatory infrastructure designed to prevent a future financial crisis. The Act, which  was the result of an open and accessible process,  created a framework for a 21^st century financial regulatory system.  While Senator Dodd wanted a single prudential regulator, he could not get 60 votes for that.

He said that the Financial Stability Oversight Council is doing a remarkable job in making regulators work together and spot initial financial stability problems that could trigger another crisis. He also strongly emphasized that Dodd-Frank unmistakably  eliminated too big to fail.