Arthur Levitt, Ex-SEC Chairman, SLAMS Financial Reform Bill

Congress "ducked" on financial regulation, neglecting to solve the problems that caused the financial crisis, former SEC chairman Arthur Levitt said.

In an interview with the Street, Levitt, who now serves as a Goldman Sachs adviser, said the Dodd-Frank financial legislation, passed in July, accomplishes very little. It has left the regulatory bodies unfocused and ineffective, and it has failed to determine specific regulatory policy, he said.

"What Congress did, in effect, was they highlighted a battery of issues and then turned it over to the regulators," Levitt said. "Its efforts at preventing 'too big to fail' and systemic risk, I think, were ill-advised."

According to the Street interviewer, Levitt called the Dodd-Frank reform an "irrational mess" last week at the Loan Syndications and Trading Association conference.

A real problem, Levitt said in the interview, is that regulatory powers are shared by a variety of agencies, allowing for dangerous inefficiency. Creating a "council of regulators" was "the wrong solution," "almost by definition," he said, referring to "turf battles" that will distract the regulatory bodies, which include the Securities and Exchange Commission, the Federal Deposit Insurance Corporation, the Commodity Futures Trading Commission and the new Consumer Financial Protection Bureau.

"With the different balances of power ... [regulators] are bound not to be terribly effective and responsive, at a period when timing becomes of critical importance," Levitt said. "Streamlining certainly should have been done."

The SEC and CFTC, for instance, should have been merged, he said.

"Because of politics involved, they [Congress] simply ducked on that issue," he added. "The lobbying that had been focused on the Congress up until now is going to be focused on the CFTC, and the FDIC and the SEC and the new bureaucracy created by the consumer-protecting agency."

WATCH the interview:

Comments

[AyeChart]

03:13 PM on 10/21/2010

Financial reform bill an irrational mess? He gets notoriety for saying that? I've been saying that for months! Put my picture on HuffPost!

[Jane Diekmann]

02:30 PM on 10/21/2010

Even if you agree wholeheartedly with financial reform, do not lose the necessary skepticism. Levitt is right, there will be turf wars, partisan meddling, and staggering bureaucratic inefficiencies. When are those things not present in our government?

What we truly need is not regulation, but enforcement. Laws were broken that precipitated this crisis. Throwing agencies at problems is like playing Scrabble on LSD, where the CFPB replaces the OTS, dispersing its duties among the OCC and SEC, etc. etc. If those agencies were enforcing their mandates and rules in the first place, things might not be so bad as to need another acronym.

[hallowellboy]

12:55 PM on 10/21/2010

Like this guy wasn't a part of the problem?

[vippy]

05:31 AM on 10/21/2010

It is not a mess but was done so intentionally! And after the election the rape of this country will continue, whether it is the DEM Party or the GOP.

[Reno Fickler]

10:13 PM on 10/20/2010

Age and guilt have caused more than a few to, pardon the expression, come to Jesus.
Divine intervention is the ONLY thing that is going to save your A$$ Mr. Levitt.

[TGNY]

09:39 PM on 10/20/2010

We are in the place we are in today because of SEC chairman like him.

[gaubladt]

07:40 PM on 10/20/2010

The monster, Levitt, is in his golden parachute phase. He is reaping the rewards of his evil deeds from his patron & benefactor: Goldman Sachs.

[Count DeMonet]

07:24 PM on 10/20/2010

This clown helped run Brooksley Born out of DC when she ran the CFTC. Now's he's Monday- morning quarterbacking. He had a chance to make a difference when he ran the SEC...and he blew it.

[steve11407]

06:40 PM on 10/20/2010

Reminds me of the Dimcrat counterfeiter that printed some $18 dollar bills. He tried to pass them at the bank and the teller said. "what kind of change could I make with this?".
The Dimcrat said give me 2 nines or 3 sixes

[CT Independent]

05:22 PM on 10/20/2010

Financial wizards did not destroy our country. It was all those people who took home equity loans to buy flat screen TVs. When will we learn to take some responsibility for our actions.

[BBackSoon]

08:57 PM on 10/20/2010

But those flat screen purchases pushed the economy along for 10+ years.

[Reno Fickler]

10:15 PM on 10/20/2010

But it was the Chinese economy.

[CT Independent]

12:14 PM on 10/21/2010

Unless those televisions were made in USA (which they were not).

[she343]

01:05 AM on 10/21/2010

When the financial wizards are in jail for fraud, I'll worry about a few TVs.
These wizards are the ones who spent years telling people home equitity loans and their other products were just smart financial practices. I still get all kinds of junk mail telling me I need more/new credit!

[CT Independent]

12:16 PM on 10/21/2010

What you are saying is that you are an alchoholic because there are too many alchohol commercials on TV. You are calling it junk mail, but you are still blaming it for your woes?

[rikster]

05:16 PM on 10/20/2010

irateness leads to irrationality....

[Duppy]

05:06 PM on 10/20/2010

This coming from the ex-head of an institution that did not see the Wall Street meltdown coming. He has zero credibility. Go away ! who cares what you think !

[Palito]

05:05 PM on 10/20/2010

What? A weak Congress captured by big corporations, afraid to tackle any big issue for fear of upsetting the current system? Get out of here!

[frank day]

04:53 PM on 10/20/2010

This guy totally failed to do his job.

Why should I listen to anything he says?

[KC10]

04:31 PM on 10/20/2010

Maybe the financial reform bill is better than I thought. Apparently Goldman Sachs doesn't like it.