WASHINGTON – Today Senate Banking Committee Chairman Chris Dodd (D-CT) held an oversight hearing on the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

 

“Today, I believe we can say that, thanks to the hard work of Democrats and Republicans on this committee—and with the sage counsel of our witnesses and many others whose perspectives we have considered carefully—we have delivered the reform our financial system needs and provided the American people with the economic stability they deserve,” said Chairman Dodd.

 

“I believe that our economy will grow again.  People will make money.  And policymakers will be tempted to forget the lessons of this crisis.

 

“But, mark my words: There will be another crisis.  Greed and recklessness will rear their heads again.

 

“I can tell you with confidence that, when that day comes, we have provided regulators with the tools they need to see it coming and put a stop to it in time.

 

“But whether they will actually do so largely depends on the foundation laid by those of you before us here today.”

 

 

“Thank you to our witnesses for joining us here today.

 

“I took over the chairmanship of this Committee nearly four years ago.  And over that time, we have witnessed the near-collapse of the American economy, a crisis that cost us millions of jobs, wiped out trillions of dollars in wealth, and, at long last, provided the impetus for fundamental reform of our financial system.

 

“That reform should have happened long ago.  For nearly three years, this committee has held hearing after hearing identifying and examining gaps, overlaps, and shortfalls in a regulatory system that had not been updated since the 1930s.

 

“Today, I believe we can say that, thanks to the hard work of Democrats and Republicans on this committee—and with the sage counsel of our witnesses and many others whose perspectives we have considered carefully—we have delivered the reform our financial system needs and provided the American people with the economic stability they deserve.

 

“We have put an end to “too big to fail” bailouts, and to an era in which executives on Wall Street felt free to gamble with other people’s money in the belief that taxpayers would be there for them if they lost.  Now, Americans and executives alike know with certainty that, if a company puts itself in a position to fail, fail is exactly what it will do.

 

“We have increased transparency and accountability in our markets, bringing the $600 trillion derivatives market into the open and preventing shady lenders from operating in the shadows.

 

“We have established an early warning system, so that we never again find out that a financial product or practice is unsafe only after it has already undermined the stability of our economy.

 

“And we have established an independent consumer financial protection agency, to provide Americans with the clear and accurate information they need to make good financial decisions, as well as with the security that comes with knowing that someone is watching out for your interests and your interests alone.

 

“But, as you will notice, there is no “Mission Accomplished” banner hanging behind me here in the committee room.  The work is not done.

 

“I’ve heard critics say that the new law leaves too much up to regulators.  But it was never my intention to have the Senate do the job of regulators; indeed, I don’t think anyone wants the Senate writing detailed prescriptions that require technical expert knowledge.  Nor could we afford to tie regulators’ hands with rigid legislative requirements that can’t be adapted to changing circumstances. 

 

“What we have done with this legislation is to eliminate the gaps, overlaps, and shortfalls that allowed some financial actors to game the regulatory structure—and some parts of our financial system to go unregulated entirely.

 

“The Glass-Steagall Act of 1933, which established the Federal Deposit Insurance Corporation, was 37 pages long.  The Securities and Exchange Act of 1934 was just 29 pages long.  They laid the foundation for nearly 75 years of growth and innovation in our financial sector, and prosperity for generations of Americans.  But it took competent and energetic regulators to make them work.

 

“Our bill is 848 pages long, because times have changed.  Our financial system is more complex, and we are competing in a global market place.  We were asked to reform the entire financial system and, that can’t be done in a handful of pages.  But, like Glass-Steagall and the Securities and Exchange Act, it will require good regulators. 

 

“I wish I could write a law that prohibits a trader from gambling away his firm’s bottom line, or an executive from putting short-term gains above long-term stability.  But we can’t legislate morality, and goodness knows we can’t legislate wisdom.

 

“All we can do is establish a comprehensive framework and a clear path forward.  And that is what we have done.  The regulators still have to interpret and enforce the law.  And those who profit from the innovation and flexibility that define our financial system still have to remember that evading the rules of the road, in letter or in spirit, hurts us all.

 

“This new law gives our president the ability to walk into the G-20 meetings as a representative of the world leader in financial services with a framework for the rest of the world to follow.

 

“When we first warned of the flaws in our system back in January 2007, few thought we’d end up on the path we’ve traveled since.  After all, people were making money.  What better proof of the soundness of the system could there be?

 

“Well, I believe that our economy will grow again.  People will make money.  And policymakers will be tempted to forget the lessons of this crisis.

 

“But, mark my words: There will be another crisis.  Greed and recklessness will rear their heads again.

 

“I can tell you with confidence that, when that day comes, we have provided regulators with the tools they need to see it coming and put a stop to it in time.

 

“But whether they will actually do so largely depends on the foundation laid by those of you before us here today. 

 

“Senator Shelby?”

 

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