Dodd to Wall Street: Here Comes the Regulation
Sen. Chris Dodd (D-Conn.) just wrapped up an address to the media, saying that he will maintain his chairmanship of the Senate Banking committee in the new Congress.
In his remarks, he laid out a six-point plan to Wall Street, which carried a strong and implicit message: More and stronger regulations on financial institutions are coming and fast. He said:
1) "Regulators must be strong cops on the beat rather than turn a blind eye to reckless lending practices," Dodd said. "Markets cannot police themselves."
2) Lawmakers must "remove incentives for regulators to compete against each other for business," he said.
3) Congress must ensure that all financial institutions are "carefully supervised," Dodd said. He said he hasn't made up his mind whether that should be by several agencies or one super-agency.
4) There must be more transparency.
5) Lawmakers must create a "21st century financial architecture," Dodd said. This echoes comments from Treasury Secretary Hank Paulson, who has said the financial regulatory climate is well behind the times.
6) Regulations protecting consumers -- concerning mortgage lending and credit card lending -- are just as important as regulations on institutions.
When will lawmakers start crafting these regulations? Right away, Dodd said.
It was unclear if the Obama team sent Dodd out with this message or if he's going rogue.
Regardless, Dodd is not alone in a call for new regulation of Wall Street.
“As we get through this recession we’ll see a new union, if you will, between the invisible hand of the market and the visible fist of the government,” Paul McCulley, managing director of PIMCO investment firm, said on CNBC this morning.
-- Frank Ahrens
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