Former Sen. Christopher Dodd, D-Conn., in a passionate speech at the fi360 Conference in San Antonio on Thursday, spoke vividly about the early days of the financial crisis and how financial reform evolved from January 2007 until now.
Dodd (left) said that, initially, even after specific warnings that the wheels were coming off of the mortgage market, which he said was the genesis of the crisis, Wall Street executives, regulators and legislators repeatedly denied that financial markets were in trouble. In fact, he said, they were "largely uninterested, despite early signs of a market in trouble."
"In early 2007 there were calls from Wall Street for more deregulation," and the threat that "if you don't deregulate we will go to London," Dodd, a Senator for 30 years, said. There was even "a similar argument from those in London; if you don't deregulate we will decamp to go to New York."
"In calendar year 2007 we held almost 80 hearings, formal and informal meetings, almost daily, on the failing mortgage market," said Dodd, who took over as CEO of the Motion Picture Association of America in March. On-record statements "repeatedly downplayed and even ridiculed problems," until it took "in 2008 cascading events to make [the collapse] a priority."
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He said that on Sunday, March 16, 2008, when it was announced that Bear Stearns had failed and would be bought by JPMorgan, for $2 a share, “We were within 10 minutes of declaring a U.S. bank holiday.”
'Most Extraordinary Night'
Dodd described the worst part of the crisis in September of 2008, the "night of a most extraordinary meeting, with Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke, and leaders of both parties in then-House Speaker Nancy Pelosi's meeting room. Bernanke, said: 'Unless you act in next few days the financial system in the U.S. and rest of world will melt down. The air left the room;' " he said. "There were ageless moments of quiet."