Opponents of Dodd-Frank probably won’t try to repeal the financial-regulation overhaul, but they may attempt to “starve it,” said the “Dodd” in Dodd-Frank—former Connecticut Sen. Christopher Dodd—during an appearance in connection with a conference at Notre Dame earlier this year.
Speaking March 31, while Congress was still debating the next federal budget, Dodd said the law is too popular to expect any serious repeal attempt. But he said he worries “every day” that opponents will try to drain away its effectiveness by cutting the budgets of federal regulatory agencies.
Dodd was asked why the bill didn’t give regulatory agencies such as the SEC permanent appropriations to carry out their added oversight duties. He responded, “Because I couldn’t get the votes.”
Dodd made his remarks in a private keynote address to attendees of the Notre Dame Law School symposium on Corporate Governance and Business Ethics in a Post-Crisis World. The event was made possible with financial support by Hewlett-Packard Co.
Besides talking about the law, Dodd shared details of activity behind the scenes in Congress at the height of the financial crisis. He described a meeting in House Speaker Nancy Pelosi’s office the evening of Sept. 18, 2008, days after the collapse of investment bank Lehman Brothers and insurance company AIG.
Fourteen people attended the meeting, he said, including the House and Senate leadership from both parties, Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke. Dodd said Bernanke solemnly told the group, “Unless you act in the next few days, the entire financial system of this country and a good part of the world will melt down.”
Congress went on to pass the Troubled Asset Relief Program (TARP), authorizing Paulson to spend up to $700 billion to purchase distressed assets, especially mortgage-backed securities, and make capital injections into banks. Dodd said it was the right move. The money has all been paid back; half of it was never used.
“I will go to my grave believing that had we not acted when we did, in the fall of 2008, we’d be living in a very different country today.”