The Dodd Plan - A Large Stake in the Ground
Senate Banking Committee Chairman Chris Dodd (D-CT) today is releasing its comprehensive draft legislation to reform the financial sector. The Restoring American Financial Security Act of 2009 represents a bold and sweeping approach to financial industry reform. The headline emerging from the 1100+ pages will most likely be the creation of a single federal bank regulator. Significant powers would be transferred from the Federal Reserve, the FDIC and the Treasury to a new Financial Institutions Regulatory Administration. The bill would also create a new Agency for Financial Stability to review "too big to fail" issues, a new National Insurance Office, and the Consumer Financial Protection Agency proposed by the Obama Administration. Executive compensation provisions are in the bill with a focus on shareholder votes on certain types of packages, clawbacks and other restrictions.
Chairman Dodd is staking out a big piece of turf in the legislative battle ahead. Liberated from the need to compromise with committee Republicans and spurred-on by his own re-election worries he is proposing to shake-up financial regulation in the United States in the most aggressive way we have seen to date. No one is a more sophisticated inside player in the Senate than Sen. Dodd. In taking this approach he is advancing two goals—he has put a lot on the table and left himself room to take things off to get the bill passed and he has also taken a stance that will help him fight those in Connecticut who have been saying he is to cozy with the financial sector.
We will have updates in the hours and days ahead about the reaction to this proposal. Watch this space.
