Mr. FRANK of Massachusetts. Mr. Speaker, working with then Senator Chris Dodd on financial reform and other matters from 2007 through 2010, was very rewarding. Senator Dodd's leadership in the Senate in getting a tough, complex regulatory bill past the Senate filibuster, was an extraordinarily impressive achievement. While he has moved on from Congress, Chris Dodd continues to defend the important reforms Congress adopted 2 years ago, and in yesterday's Politico, he wrote an important article that refutes the criticism of the bill that comes from a number of sources, primarily those financial industry leaders who behaved irresponsibly and resent the fact that they have diminished opportunities to do so. Because this debate now goes on with people trying to roll back their efforts to provide some stability in our financial system, I ask that Chris Dodd's article be printed here.[From POLITICO, July 22, 2012] WHY DODD-FRANK IS NECESSARY (By Former Sen. Chris Dodd)
Wall Street received a long overdue regulatory overhaul two years ago that fundamentally changed the way the financial sector operates and can finally provide the American people with a more secure financial sector.
At the time, I knew that these reforms we devised in Congress would not be popular with those who either had a vested interest in seeing them overturned or believed that a repeal of Dodd-Frank is good politics.
The Wall Street Reform and Consumer Protection Act passed two years ago last Saturday, overcoming many efforts to kill it. Opponents have since spent millions to stall implementation of new financial rules--while attempting to build support for repeal.
Yet 73 percent of Americans support strong oversight of Wall Street and this law's provisions, according to recent polling by Lake Research Partners. And for good reason. Consider the recent revelations that one bank has admitted and others are being investigated for manipulating Libor, the interbank loan rate. Another bank suffered a $6 billion trading loss because of bad actors. These misdeeds and more are making the strongest case for implementing Dodd-Frank.
Opponents of this law will likely continue their efforts to weaken our work. But supporters of these financial reforms must continue to explain why these changes are a vital part of long-term U.S. economic security.
Critics largely forget that U.S. tax dollars rescued the economy from the brink of collapse in 2008. Putting basic rules in place to prevent a crisis of this magnitude from being repeated was not only responsible--it was essential.
Rep. Barney Frank (D-Mass.) and I worked with both Democrats and Republicans for two years to craft a bill to do just that--using a transparent process to update our financial system for the first time since the 1930s.
This was a fundamental transformation of our regulatory structure, allowing regulators to keep pace with the 21st century's global financial marketplace. The pace of implementation has been slow because the complexities of these problems required careful consideration.
I've always believed that a thoughtful approach is needed to ensure these issues are adequately studied and new rules are implemented correctly. Though it's important that these new regulations be implemented soon, it's far more important that these regulations get it right.
The law that Frank and I--and many other members of Congress--completed two years ago is having a significant effect, providing critical benefits to U.S. consumers.
For decades, regulators focused exclusively on protecting the safety and soundness of the financial system--not consumers. We created a new watchdog--the Consumer Financial Protection Bureau--whose sole focus is to protect consumers from abusive and deceptive financial practices.
Its work is under way with the creation of consumer-friendly mortgage forms and credit card agreements that force lenders to give borrowers a clear and accurate description of their loan terms. The bureau also has the power to crack down on deceptive practices--as revealed last week in the settlement with Capital One, which must send refunds to nearly two million customers. Solutions like this, unimaginable two years ago, are forcing financial institutions to rethink some products they offer and adopt new consumer-friendly practices.
We also established requirements for banks to maintain higher capital levels to better absorb unexpected losses. Those running financial institutions are required to be far more knowledgeable about their firm's everyday dealings. Regulatory agencies must now communicate in real time with one another and watch for problems ahead. Dodd-Frank also prohibits the Federal Reserve from bailing out failing firms and brings more accountability to the $600 trillion derivatives market.
The bill we passed is by no means perfect. But reversing course now can only weaken the economy and bring back the reckless days of lax regulations--or no regulations--and abusive practices that nearly destroyed the economy.
Our time and energy would be better spent working together to strengthen this law and improve the work we started--responsibly implementing an effective regulatory structure that puts the best interests of the American people above all else.
Chris Dodd, a Democrat who represented Connecticut in the Senate for 30 years, is a co-author of the Dodd-Frank Wall Street Reform and Consumer Protection Act. He retired in 2011 and is now chairman and CEO of the Motion Picture Association of America.