Dodd Unveils Financial Fix
Sen. Christopher Dodd (D-Connecticut), chairman of the Senate Banking Committee, announced a sweeping proposal on Tuesday that would overhaul financial regulations that would create a single banking regulator.
“The financial crisis exposed a financial regulatory structure that was the product of historic accident, created piece by piece over decades with little thought given to how it would function as a whole, and unable to prevent threats to our economic security,” Dodd told reporters.
According to a discussion draft summary of the Restoring American Financial Security Act, Dodd’s plan would create a Consumer Financial Protection Agency; create an independent agency to identify and address systemic risks; give shareholders decision making powers on executive compensation and corporate governance; and close regulatory loopholes that allow risky and abusive practices to go unnoticed in such areas as over-the-counter derivatives, mortgage brokers, and payday lenders.
The plan proposes a single federal bank regulator that would be headed by a presidential appointee to be confirmed by the Senate and that would combine the functions of the Office of the Comptroller of the Currency and the Office of Thrift Savings, the FDIC’s state bank supervisory functions, and the Federal Reserve, which would do little more than set monetary policy. Dodd’s plan also would establish an Office of Credit Rating Agencies at the Securities and Exchange Commission.
Although the bill is more radical than the one being proposed by the House Financial Services Committee, “it confirms that we are moving in the same direction and reaffirms my confidence that we are going to be able to get an appropriate, effective reform package passed very soon,” said Rep. Barney Frank, who chairs the House panel.