As President Obama was meeting with top leaders of the House and Senate this morning, April 14, to turn up the heat on passage of financial services reform–which has become his top legislative priority–Senator Christopher Dodd (D-Connecticut), chairman of the Senate Banking Committee, took to the Senate floor to lambaste those in Congress and on Wall Street who he said have been spreading “misinformation” about his financial services reform bill. Dodd said that his financial services reform bill would “be produced in the next several days.” The bill will then go to the full Senate floor for debate.
Dodd said on the Senate floor that he wanted to “set the record straight,” tackling first what he said was “one of the wildest and, frankly, most dishonest objections to this legislation, which is the notion that it is somehow a partisan document.” He went on to detail his 38 months in crafting the bill with Republican counterparts on the Senate Banking Committee, and how he’s had “countless meetings and hearings” on financial services reform. “Senator [Richard] Shelby and I have been working together for over a year on these issues, and I cannot for the life of me understand how anyone could claim with a straight face that this is a partisan effort,” Dodd said.
Senate Minority Leader Mitch McConnell (R-Kentucky), one of the Senators meeting with Obama today, has said he opposes Dodd’s bill, and noted in comments today on the Senate floor before meeting with Obama–and just before Dodd spoke–that the legislation, via a number of provisions, “authorizes permanent bailouts.” But Dodd shot back in his comments: “This bill ends bailouts.” The largest Wall Street firms, Dodd said, “will have to put up money for a $50 billion fund to cover the costs of liquidating the failed financial firm, and any shortfall will be made up by the largest and riskiest financial firms.”
In his meeting with top lawmakers, Obama was to make the case for strong regulation of derivatives. In a recent interview with Investment Advisor, SEC Chairman Mary Schapiro said that there are still gaps to be filled in both the House and Senate financial reform bills when it comes to derivatives oversight. While “bringing over-the-counter derivatives under regulation for the first time is critically important,” Schapiro told IA, …We’ve got some pretty big end-user exemptions in the House and the Senate bills that would have a lot of swaps not centrally cleared. So I think we have some work to do to narrow some of the gaps and exemptions that exist. I think that the [Dodd] bill creates confusion with respect to securities-based swaps because it doesn’t treat all securities-based swaps like securities even though they are an economic substitute for securities. Some of them will be treated as commodities even though they have securities as their reference point. So we think the lines could have been drawn in a way that was more effective than currently.”