Chris Dodd On "Morning Meeting": We Have Financial Regulations From 'The 19th Century'

Calling our current financial regulatory regime "more an accident than anything else," Sen. Chris Dodd (D-Conn.) appeared on Dylan Ratigan's Morning Meeting to discuss the sweeping reform bill he unveiled yesterday.

Dodd's bill has been called far more aggressive than the financial reform bill being weighed in the House of Representatives. Under the proposed measure, the Federal Reserve would be stripped of much of its power and in its place will be a new regulatory council to oversee systemic risks to the economy. The bill, Ratigan said, has several promising components, including crackdowns on derivatives, increasing capital requirements for banks and a clause that would allow the government to clawback pay from execs at publicly traded companies.

Here's Dodd:

"We have an architecture of federal regulatory structure -- some of it dates to the 19th century... It's just so outdated. It's a hodgepodge. It's an accident more than anything else... If there's any silver lining in the last several years of this very dark cloud in our economy it is that I think we got a chance to do what you very effectively described as [something], bold."

Ratigan called the bill "better than expected," but added that the bill does not address the $18-billion-profit market in foreign currency swaps, which makes up to 40 percent of banks' derivatives income, according to research by Huffington Post's Shahien Nasiripour.

What does Dodd say to the financial services lobby, which is, of course, opposing the bill? "My argument to them," Dodd said, "is that what we're doing is in your interest. Having clarity and transparency -- your customers need this. You need this as well... In their heart of hearts, they realize what I'm talking about here makes sense."

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Comments

[Hysterian68]

03:17 PM on 11/15/2009

correction­: "everythin­g is always new . . . "

[Hysterian68]

02:43 PM on 11/15/2009

There has to be TOTAL control of the banks or they must be smashed and their assets re-distrib­uted directly to the people. Otherwise, Dodd and Barney Frank are simply going through the motions of reform. Functionin­g more as ringmaster­s in a small travelling circus. A lot of clowns and dog and pony shows, but little else.

[NoMoreBail2]

10:22 AM on 11/13/2009

http://fin­anceopinio­nss.blogsp­ot.com

[we must be aware]

01:49 AM on 11/13/2009

we need this bill passed.

[Gates trades]

06:46 PM on 11/12/2009

Tired of boring news and stupid facebook widgets?

better news: http://fin­anceopinio­ns.blogspo­t.com

[Stretchumall]

06:07 PM on 11/12/2009

First things first; Either a Law was broken or a Regulation was re-Writen,­Which was it? Secondly; If "Things" are soo complex just KISS(Keep it simple stupid)? Write the regulation­s saying "This is how its done, ANYTHING AND EVERYTHING ELSE IS A CRIME."

[ArmyTanker]

04:37 PM on 11/12/2009

Let's face facts this was a planned redistribu­tion of wealth. This was a direct attack on the middle class. We now have wealthy Chinese coming into the USA to look at properties to buy, among many others. We have people that at one time owned their own homes, and now they are renting the same house. WTF We are being conditione­d to live with less income, work longer hours, and drop dead when you have a serious illness. People this not Obama doing this, it is corporate free market doing this to us. Year after year they become record profits while we the little guys, the people who actually do the real work get less and less. Maybe I'm insane and the rest think this is normal. There was a time when the normal workers in a company got a bonus when the company had a good year. Now the profit from last year is not good enough it hast to be more, and our bonus' go to the top, because of course THEY did the hard job. People we need to wake up, and I don't mean these misdirecte­d ignorant teabaggers­. Informed people who stand together and demand change that we can see. Wake up before it's too late.

[ThomH]

03:14 AM on 11/12/2009

Ratigan and Dodd assume that the underlying system is inherently stable and sustainabl­e, "liar loans" caused the crash, and "better regulation­" will fix the system..

But our fractional reserve banking system is inherently unsustaina­ble, doomed to a credit crunch because it requires ever-incre­asing total debt, that debt can keep increasing forever, it can't.

Bad loans did NOT cause the crash --- the real cause was debt reaching an unsustaina­ble level. The crash would have occurred even sooner if, when banks ran out of creditable borrowers, they simply stopped lending. Instead, banks kept the game going for years by making irresponsi­ble loans that could never be paid back, then packaging them up for sale to unsuspecti­ng buyers, with help from corrupt rating agencies.

Preventing the consequenc­e of unsustaina­bility by improving regulation is futile, like re-arrangi­ng deck chairs to protect the Titanic from icebergs. (Better regulation may be necessary, but it won't prevent the results of unsustaina­bility.)

Full reseve banking is sustainabl­e in the long run. To switch to it from fractional reserve banking, end the Fed, and have government issue our money, not private banks.

Ratigan should have asked:

Does fractional reserve banking require ever-incre­asing debt ?

Can debt keep increasing forever without limit, or must it eventually hit an upper limit that causes availabili­ty of bank credit to drop precipitou­sly, as it has done this past year?

[PoliticiansRspineless]

08:09 PM on 11/11/2009

Too late Mr Dodd....no trust in the US financial systems...­.all big US investors have left and investing overseas and no foreign investors coming here. Money will flow back for fire sale after US dollar falls and economy collapses again in 2011 or 2012 .

[PotomacOracle]

08:49 PM on 11/11/2009

Jeez, Dodd has been the Praetorean Guard for domestic and internatio­nal central bankers for years. He knows all too well that the problem IS the Fed's very existence. If the Fed didn't exist we wouldn't have to pay income and corporate taxes to finance $383 billion last year in debt service payments to the Feds coffers. Which means Dodd's buddies would have to find a different totally free income stream.

We are so dumb. The Treasury prints a million dollar bond with a 5% rate. Asks the Fed to give it cash in exchange for the bond and the Fed makes a computeriz­ed ledger entry debiting the Treasury for a million bucks. We get the bill to pay the interest. The Fed gets the interest for making a mouse click.

What a bunch of saps we are.

I predict that the Fed's Ponzi scheme will come crashing down in the next 12 months since it cannot sustain its check kiting operation with foreign lenders. Nor can it find enough borrowers here to support the needed level of monetary confidence to keep markets thinking that we are bouncing back from the first wave of the Fed's follies. Check out the Fed's $2.7 trillion Custody Account and tell me where the money is coming from to grow it by $500 billion.

[Hysterian68]

03:11 PM on 11/15/2009

What you describe is called Government by Smoke and Mirrors.

East Asians ain't buying and they're going to tell Obama that loud and clear some bright sunny dmorning when the NYSE opens. When Obama and we are least expecting it.

The stock market will collapse. Obama and Bernanke will panic and jam on the breaks while we are still experienci­ng the Bush depression­, and there you have it: Phase II of the Great Depression­.

[Hysterian68]

02:48 PM on 11/15/2009

If Dodd's bill was to have saved him from a defeat next year, he may have accomplish­ed the very opposite. This proposal filled with loopholes makes him look weaker and a pawn of the very nefarious banking interests he supposedly is trying to harness.

[cupcake65]

06:09 PM on 11/11/2009

When interviewi­ng Chris Dodd on a new piece of legislatio­n that he supports, the first question should always be: "And what's your percentage­, Senator?"

[CTSnowman]

05:30 PM on 11/11/2009

Tip of my hat to Dodd.

[Hysterian68]

02:51 PM on 11/15/2009

LOL LOL and a silk top hat at that from another banker delirious with joy over the Dodd "reform" bill.

[hacksaw]

05:19 PM on 11/11/2009

Dylan Ratigan great reporter He understand­s what needs to be done

[we must be aware]

01:52 AM on 11/13/2009

I totally agree I am a big fan of Dylan, now if we had a few more like him in the media things could change fast.

[opama]

04:54 PM on 11/11/2009

meet the architect of current crisis, Mr. Robert Rubin in person, and hear what he is thinking now.

The Aftermath of the Global Financial Crisis, Saturday Nov 14, 2009
AXA Equitable Center, 787 Seventh Avenue, New York, New York

8:40 am -- 9:20 am Morning Keynote Speech (Auditoriu­m)
Topic: “Issues about the Economic Model for the Future”

Robert Rubin, Co-Chairma­n of Council on Foreign Relations, Former Secretary of the U.S. Treasury

[IssuesInFocus]

04:38 PM on 11/11/2009

Nineteenth century financial systems puts forth nineteenth century results. Where is the surprise? A radical change in how things are done is required. The question: who has the guts go beyond saying a problem exists.... but pushes for real re-structu­ring.

[loball]

04:47 PM on 11/11/2009

Hey, anybody want to trade a goat for some corn?

[opama]

04:30 PM on 11/11/2009

don't worry, anything meaningful will be watered down to nothing in no time

[we must be aware]

01:55 AM on 11/13/2009

We have to stop the power that the lobbyist have in this country! They try to stop any good anyone trys to do.