Sen. Christopher Dodd has finally showed his cards, said Alison Vekshin in Bloomberg.com. After months of hearings, special-interest lobbying, and partisan maneuvering, the chairman of the Senate Banking Committee this week unveiled a financial reform bill that proposes “the most sweeping rules overhaul since the 1930s.” The measure would put the Federal Reserve in charge of overseeing all banks with assets of $50 billion or more (about 35 banks), as well as large “non-bank” financial firms whose failure could threaten the financial system (think AIG). The bill, or something close to it, stands a reasonable chance of passage: Sen. Richard Shelby of Alabama, the ranking Republican on the Banking Committee, said he and Dodd “conceptually agree on 85 or 90 percent” of the reform. The financial services industry’s opinion on the matter, though, is best expressed by the stock market—where bank shares sank after Dodd introduced his bill.
“If Wall Street hates it, it can’t be all bad,” said David Weidner in Marketwatch.com. Big banks deplore the “restrictive architecture” in Dodd’s plan, which includes a version of the so-called Volcker rule that bans banks from speculating with their own capital. They are also chafing at a provision that would set up a nine-member committee, chaired by the treasury secretary, to monitor the financial system for the kind of risky trading and reckless lending that contributed to the financial crisis. But Dodd doesn’t seem worried about the grumbling from Wall Street. The Connecticut Democrat is not seeking re-election, and with his 35-year run as a senator winding down, he’s no doubt thinking about how he’ll be remembered. “He doesn’t want his legacy to be the credit crisis and the Great Recession.”
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